The provincial government of NWFP is likely to announce a hydel power policy after introducing certain amendments in the existing policy unveiled in 2002 to enhance capacity limit from 20 MW to 50 MW, sources in Sarhad Hydel Development Organisation (Shydo) told Business Recorder on Monday.
Chief Minister, Akram Khan Durrani announced the framing of the New Hydel Policy in his address to NWFP Investment Conference, March 2005 to attract public and private investors towards the hydel potential of the province.
The draft policy had been prepared in August 2005 and submitted with the provincial government for consideration and would be announced after its formal approval by the provincial cabinet.
The need of the new Hydel Power Policy was also raised in the wake of the federal government power policy, which allows provinces and Azad Jammu & Kashmir to develop and implement power generation projects up to 50 MW capacities, fulfil the provincial government aims at encouraging private sector in all regimes, more options for power utilisation were to offer in addition to captive use and harness enormous hydel potential in the province.
The main features of the new hydel power policy according to the draft policy, Shydo will provide one window facility for assisting the private investors in extending technical help for setting up hydropower projects, implementation of projects through solicited and unsolicited proposals.
The sites for establishment of hydropower plants will be awarded on the basis of competitive bidding on a baseline reserve lease price of Rs 1000/-per kW per annum for solicited sites, whereas baseline price for raw sites will be fixed at 70 percent of the indicated power potential in kilowatts.
Furthermore, the approved lease price will be escalated to 25 percent after every 10 years of lease period and the concession period will be 33 years. The lease period and plant according to the new policy could be transferred to another buyer of the project with the approval of Shydo upon payment of prescribed fee. For the development of the raw sites, where feasibility studies were not available, Shydo would also welcome unsolicited proposals.
The hydrological risk will be borne by power purchaser companies ie Peshawar Electricity Supply Company (Pesco) and Tribal Area Electricity Supply Company (Tesco) or private company. Furthermore, the investors of the projects have also been exempted of all kind of provincial taxes, with no water use charges. All hydel power plants up to 50 MW allowed to be installed on Built, Operate and Transfer (BOT) basis, for a period of 33 years.
All incentives provided in the Federal Hydel Power Policy had been made part of the Hydel Power Policy 2005, which include permission to issue corporate registered bonds, permission to issue shares at discounted prices, foreign banks to underwrite the issue of shares and bonds while the non-residents may busy securities with State Bank of Pakistan (SBP) permission.
The investors had also been exempted of sales, income, turnover and withholding taxes, repatriation of equity along with dividends allowed un-conditionally, maximum indigenisation, non-Muslims & non-residents exempted from Zakat on dividend and the lease of public land for a period of 33 years.
Selection for the lease of the project of 1 MW would given on first come first serve basis, with no lengthy procedures, just registration and bank guarantee and nominal lease money fixed @ Rs 300/kW/Annum. Shydo has to issue no objection certificate (NOC) within a period one month after registration. The investors were required to construct the project within a period of three years, lease money payable to Shydo at the commissioning of project and would be responsible for the sale of energy without any interference by the provincial government.
The draft policy stands for additional incentives for those interested in establishment of power plants for captive power & industries, which includes 3-5 years timeframe for starting production, tax holiday for initial 5 years, only 5 percent customs duty on import of machinery and lease of both public lands for industry if available.
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