ISLAMABAD: The Laraib Group has expressed concerns on slackness of federal government in facilitating hydropower projects, saying that at present projects are in “circular trap” due to non-finalization of IGCEP.
This was conveyed by Wu Zefeng, Director, Ashkot Energy Private Limited, in a letter to Managing Director, PPIB.
The Ashkot raw site, on the River Neelumin the AJ&K, was identified and registered by the Sponsors in January 2011 some eleven (11) years ago. In July 2017, due to higher plant size, AJ&K PPC transferred the project together with draft feasibility study to PPIB leading to prequalification of the Sponsors by PPIB during Jan-Sep 2019. Since then, for the past three years, the Project Company’s request for issuance of short-term LoI for feasibility approval is pending and the project is stalled in PPIB, apparently due to IGCEP.
The selection criteria for IGCEP 2030, as given in Section 5.2(8), is that the project will be considered as ‘committed’ if it has obtained LoS as of December 2020 for private sector projects. There is no bar on issuance of LoI -an inherent implication in IGCEP is that all processes, prior to issuance of LoS, should be allowed to be completed. Thus all projects should be issued LoI, and get their feasibility studies approved and get tariff determination from NEPRA. This will create a pool of projects with all fundamentals, commercial and technical details ascertained, established and approved, prior to issuance of LoS and adoption by IGCEP on a least cost basis.
Zefeng maintained that the company has also suggested that in the national interest all power generation projects, whether IPPs, public hydropower or nuclear, should go through the Nepra cost and tariff approval process. This will ensure all costs and tariffs are measured and determined under the same scale, creating a level playing field for IGCEP to make the least cost process more reliable, relevant and realistic.
At present projects are in a “circular” trap; development is stopped at PPIB and all governmental levels as IGCEP has not approved them, whilst IGCEP will not consider them until they reach the requisite development milestones. Such projects, especially hydropower with a long gestation period of 15-20 years, will always be stuck in doldrums and never see the light of day which is illogical and counterproductive, he added.
The letter, which has also been sent to Minister for Energy, states that delay in implementation of the project in addition to delay in developing Pakistan’s hydropower resources has the potential of damaging Pakistan’s claim to the water use rights of the River Neelum which were already hurt by the hugely delayed Neelum-Jhelum Hydropower Project.
“We therefore request PPIB to issue LoI to the project to achieve feasibility study approval milestone and provide firm/approved financial and technical credentials of the project. The next decision point would be issuance of LoS (under control of PPIB) and consideration in the next iteration of IGCEP, under the least cost generation criteria (in control of IGCEP),” Zefeng maintained.
The Company states that it believes that PPIB should take a pragmatic approach in protecting Pakistan’s private hydropower sector which has been neglected for decades and once again faces impediments to move ahead in the development process, adding that any lapse on this account may lead to short gestation thermal projects filling the demand-supply gap on an emergency basis, as has happened so many times in the past.
Copyright Business Recorder, 2022
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