Competitive bidding for Muzaffargarh solar PV project: AEDB irked by Nepra’s ‘slackness’

ISLAMABAD: Alternative Energy Development Board (AEDB) is reportedly upset at the slackness of National Electric Power Regulatory Authority (Nepra) on proposed competitive bidding of 600-MWp solar panel project at Muzaffargarh, sources close to CEO AEDB told Business Recorder.

AEDB wrote two letters to the power sector Regulator on June 2 and June 9, 2023 on the issue of competitive bidding of 600-MWp flagship project of Prime Minister Shehbaz Sharif government, the response whereof is still awaited as of July 7, 2023.

According to sources, in both letters, Nepra was requested to decide a viable way forward after carrying out an objective analysis of the prevailing market conditions in order to proceed ahead successfully with the competitive bidding of first 600-MWp solar PV project at Kot Addu/ Muzaffargarh.

Foregoing in view and considering the fact that the development of solar PV projects is one of the top priorities of the federal government so as to reduce the overall basket tariff by displacement of expensive imported fossil fuel based energy and to save precious foreign exchange being spent thereon, AEDB once again requested Nepra to decide a viable way forward in the matter at the earliest.

On June 2, 2023, AEDB, in its letter held Nepra responsible for disinterest of investors in the 600-MWp solar project.

Chief Executive Officer (CEO) AEDB Shah Jahan Mirza, who is also Managing Director Private Power and Infrastructure Board (PPIB), cited the reference to the determination of the Authority of February 01, 2023, in the matter of approval of Request for Proposal (RFP) documents submitted by the AEDB for the competitive bidding of 600-MWp solar PV project at Kot Addu/ Muzaffargarh, Punjab, under the Nepra Competitive Bidding Tariff (Approval Procedure) Regulations, 2017 to Chairman Nepra, Tauseef H Farooqi.

AEDB had floated the approved RFP in national and international newspapers on February 15, 2023, inviting bids from private sector investors for the development of the project. The initial deadline for submission of bids was April 17, 2023, which was later extended till May 31, 2023, on the request of prospective bidders.

A total of twelve private sector investors/ parties had purchased the RFP documents from AED. However, AEDB did not receive any bid until the deadline for bid submission.

Based on the feedback received from the market players, the prime reason for no response against the RFP for the project was the lower benchmark tariff and project cost assumed to a benchmark tariff determination as it did not take into account the impact of current market prices for equipment at high interest rates in the global market, non-indexation against SOFR/ KIBOR and inflation, availability of long-term foreign financing, Pakistan macroeconomic situation and aggressive project implementation timelines.

Copyright Business Recorder, 2023