MONDAY MARCH 05: Plans for unsolicited hydropower projects: PPIB facing resistance from its members

ISLAMABAD: Private Power Infrastructure Board (PPIB), is reportedly facing resistance from its members over plans for unsolicited expensive hydropower projects, sources close to Minister for Water and Power told Business Recorder.
"In order to overcome various issues there is a need for carrying out a benchmarking or ranking study to avoid unsolicited projects with high costs," the sources quoted some of the board members as saying at a meeting.
In the light of ECC decision of October 15, 2010, PPIB has finalised the simplified mechanism for the fast track induction of cheaper hydropower in the national grid" after due consultation with all key stakeholders, including the provincial as well as AJ&K and Gilgit-Baltistan governments, private sector project sponsors and leading lending banks to ensure its bank ability.
The scope of the hydel framework is as follows: (i) raw site hydropower projects to be undertaken by private sector; (ii) hydropower projects having already completed feasibility study in either private and public sector may be further undertaken in private sector; (iii) hydropower projects under the Public Private Partnership(PPP) arrangement; and (iv) private hydropower projects undertaken by provincial governments, Gilgit Baltistan and AJ&K where power purchaser is the federal entity, transmission or distribution network of the federal government is used, tariff is determined or approved by Nepra or GoP guarantee is required.
According to sources Minister for Water and Power who is also the Chairman PPIB inquired whether there would be no ICB under the proposed framework and whether investors would be willing to submit proposals for raw sites. MD PPIB revealed that some investors have already shown interest in raw sites, however, after the 'mechanism for determination of tariff for hydropower projects' already announced by Nepra, ICB can be conducted for projects with both feasibility study and detailed engineering design completed.
The raw site projects can be processed either through unsolicited mode under 2002 Policy or by inviting EoI in the manner stated earlier.
Members argued that the proposed simplified framework for the fast track development project needs further deliberations. "We have finalised framework which will be submitted to the ECC for approval very soon," the sources maintained.
The approved hydel framework provides three modes for project processing that are: (i) processing of sites through International Competitive Bidding (ICB) where the feasibility study and detailed engineering and design have been completed; (ii) advertisement for sites where no detailed engineering and design has been completed; and (iii) raw site proposals with no feasibility study in order to attract private investors for development of hydropower projects particularly in the regions of Gilgit-Baltistan and Chitral.
Letter of Support (LoS) for 840 MW Suki Kinari has been issued and project agreement like IA, PPA and WUA have also been finalised. Further financing documents of 150 MW Patrind project have been signed. The project agreement have been finalised and financial close is expected shortly, preliminary construction of the project has already started.
LoS has also been issued to 100 MW Gulpur hydropower project, while the feasibility study of 640 MW Azad Pattan has recently been completed.
PPIB has claimed that as a result of its serious efforts 12 Independent Power Producers (IPPs) having a cumulative capacity of over 2,400 MW have been commissioned within the past three years which are supplying reliable electricity to the national grid and at present 62 of the power generation in the country is through IPPs.