13 energy projects cleared amid poor bidding response
ISLAMABAD: The federal government has cleared for implementation 13 old renewable energy (RE) projects of about 700 megawatts — commonly called Category-III projects — and has referred the matter to the Council of Common Interests (CCI) for formal approval as bidding for a lot of 600MW solar project at Muzaffargarh received poor investor response.
Informed sources said a special cabinet committee led by Defence Minister Khawaja Asif recommended that the sponsors of 13 proposed RE plants in solar and wind technologies in Cat-III whose tariffs had been approved by the National Electric Power Regulatory Authority (Nepra) be given the go-ahead to start developing their projects. The committee also comprised Power Minister Khurram Dastgir Khan, Commerce Minister Syed Naveed Qamar and Human Rights Minister Riaz Hussain Pirzada.
Based on these recommendations, these sources said, a meeting of the Cabinet Committee on Energy (CCOE) led by PM Shehbaz Sharif last week also supported the move and decided to refer the matter to the CCI, given the inter-provincial nature of the scheme.
Mr Dastgir, who as power minister had been supportive of Category-III projects, confirmed to Dawn that the projects had been cleared. He had requested the prime minister last year as well to push the projects which could immediately go into construction phase. “An inter-ministerial committee formed by PM Shehbaz Sharif on stalled renewable energy projects has submitted its report to the prime minister, with the recommendation that the report be put before the Council of Common Interests,” he said.
Matter referred to CCI for final approval
Nepra had approved the tariffs of these 13 solar and wind power projects of Category-III with total power generation capacity of 680MW in 2017-18, but work has yet to start amid red tape. Interestingly, the Alternative Energy Development Board (AEDB) had been claiming as one of its responsibilities the development of alternative and renewable energy (ARE) projects listed under Category-III of the decisions of the cabinet committee on energy which have been upheld by the CCI while approving the ARE policy 2019.
In three separate presentations earlier to the prime minister, the energy minister, minister for human rights Riaz Hussain Pirzada and chairman of the Senate standing committee on IT and Telecom Kauda Babar had suggested that these projects were given all approvals including tariffs in a range of 3.2 to 3.7cents per kwh (unit) in 2020 but were not allowed to proceed owing to changing government policies.
They argued that since a reference tariff approved by Nepra for a government-sponsored solar power block of 600mw at Muzaffargarh in Punjab was also in the same range and yet facing bidding and financial challenges, the private sector sponsors of 13 old projects in Sindh, KP and Balochistan should be allowed to set up their plants to ensure cheaper and clean energy to consumers. Only last week the government re-advertised the 600mw Muzaffargarh solar power project.
They complained that investments of over $600 million appeared to be facing bureaucratic resistance. Power Minister Khurram Dastgir had proposed to the prime minister in October last that “approval of Category-III projects … will be a swift jump towards renewable energy”. However, the prime minister constituted a special committee, led by Khwaja Asif, on the subject in January.
As member of the committee, Minister Pirzada had complained that the chief executive officer of AEDB/Private Power & Infrastructure Board Shahjahan Mirza had been unable to make any viable suggestions and was rather “dragging his foot in typical bureaucratic style”. Mirza did not respond to requests for comments.
The Cat-III projects, said Mr Pirzada, also included 680mw of 13 advance stage wind and solar projects, having completed all requisite milestones of letters of support (LOS) as per Alternative Energy Policy of 2006 and were awarded Nepra tariff in the range of 3.2 to 3.85cents per unit, which is “lowest in the history of Pakistan” and should be allowed to move forward. Other projects in the list which had only letters of intent (LOIs) and land should be treated differently.
In a recent judgement, the Nepra had highlighted that the first round of bidding for Cat-III projects had not been carried out as required under the ARE Policy 2006 and April 2019 cabinet decision despite the fact that the regulator had set benchmark tariff of Rs6 per unit with 2.5pc annual indexation. The cost of equipment and the terms of financing at that time were quite on the lower side, compared to the prevailing market conditions. “If the bidding had taken place at that time, the projects might have been constructed at cheaper tariff and with no exposure to the foreign exchange fluctuations for entire duration of the projects.
Published in Dawn, June 19th, 2023