600MWp solar project: AEDB holds Nepra responsible for lack of interest among investors

ISLAMABAD: The Alternative Energy Development Board (AEDB) has reportedly held National Electric Power Regulatory Authority (Nepra) responsible for disinterest of investors in 600MWp solar project, sources close to Chairman Nepra told Business Recorder.

Prime Minister Shehbaz Sharif government’s flagship solar project of 600 MWp did not receive any bid until the deadline for bid submission which has irritated the top brass of government.

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.

Revised RFP: AEDB seeks approval from Nepra

According to sources, the AEDB 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, the 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 is 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 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.

Shah Jahan Mirza argued that the current status/information is being shared with the Authority for its evaluation/consideration and to decide a way toward at the earliest for fast-track development of solar PV projects in the country.

German Renewable Energy (RE) companies have shown no interest in Pakistan’s flagship solar power project of 600 MWp at Muzaffargarh saying that too much risk is involved in the project in realtion to the European market.

This assertion was shared by Gerd Schober, Team Leader, M/s GIZ REEE II Project, Pakistan, in response to a letter of Secretary Power Division Rashid Mehmood Langrial.

On March 22, 2023, Power Division in a letter to M/s GIZ had proposed areas of interest in promotion and development of ARE technologies, considering the priorities of Pakistan.

Power Division has attracted German private sector participation in development/deployment of solar energy under the fast-track solar initiatives especially in the competitive bidding for development of 600 MWp solar PV project at KotAddu/Muzaffargarh.

“We shared all information regarding the 600MWp solar project with the German Solar Association and with German companies. The feedback we receive from German companies is that too much risk is involved in this project when compared to the currently vast opportunities in developed markets in Europe,” said Gerd Schober.

Copyright Business Recorder, 2023