ISLAMABAD: Khyber Pakhtunkhwa (KPK) government has urged the federal government to give membership to provincial governments in PPIB Working Group (WG), which scrutinised Letters of Interest (LoIs) for hydropower projects in the past.
Federal Government recently slapped a ban on issuance of LoIs to hydropower projects with immediate effect and till issuance of guidelines for future, besides starting a probe of the business of sale/ purchase of LoIs.
The ban was imposed in the backdrop of a decision of Executive Committee (EC) of the Special Investment Facilitation Council (SIFC) which constituted a Working Group to inter alia review all provincial hydropower projects at Letter of Interest (LoI) stage, including Kalam Asrit 238-MW, Asrit Kadam, 229-MW and 470-MW Lower Spatgah in order to streamline their issues and policy parameters and submit recommendations with regard thereto in the next EC.
Govt bans issuance of LOIs for hydropower projects
Chief Executive Officer, PEDO, in a letter to Director General (Law), PPIB Adil Sharif stated that KPK feels that all relevant provincial governments may also be made part of the Working Group to have an informed amicable outcome of this important issue.
PEDO further submitted that hydropower is the only potential in Khyber Pakhtunkhwa and is mostly located in remote areas which remained untapped for decades. This development will be a game changer for the country as a whole and in KP in particular.
As a matter of the fact hydropower is indigenous and clean source of energy having a reducing impact on the basket price of energy in the long-term. Development of hydropower provides sustainability and major investment is spent on the site over a longer period of time which ultimately increases business and creates employment opportunities.
Following the 18th amendment, Provinces have the right to develop these resources with the help and support of the Federal Government based on which Power Generation Policy 2015 was approved by CCl and accordingly KP Hydropower Policy 2016 was issued, along with associated guidelines, which was duly approved by the KP Government.
Earlier, a meeting of the Working Group was held under Secretary Power Division on November 13, 2023 in which amongst others, it was decided that appropriate guidelines under the Power Generation Policy 2015 will be formulated at the earliest to streamline the process for development of provincial hydropower projects to be connected to the National Grid and electricity to be purchased by the federal entity.
During the meeting, Chairman NEPRA pointed out certain fundamental flaws in the criteria underlying operationalization of IGCEP for inclusion and exclusion of projects most specifically for hydropower projects. The meeting was given an impression that completion date of Diamer- Bhasha (DBD) was pushed to 2031 in the IGCEP without official confirmation of WAPDA.
Chairman WAPDA confirmed that Commercial Operation Date (COD) is likely to be June 2029 and has been changed without any logical reason. He also pointed out that IGCEP flaws are being exploited by private investors to get their projects included in the ban as evident from change in DBD completion data.
Managing Director PPIB also noted that certain assumptions/ criteria need proper review for inclusion/exclusion of power projects in IGCEP. It was mentioned that while optimizing projects, IGCEP considers only parameters like Capex including IDC (Interest During Construction), fixed O&M cost, fixed discount rate of 10 per cent, discounting over full economic life of the project.
He further highlighted that IGCEP does not consider number of tariff components allowed by NEPRA like: (i) Water Usage Charges (WUC);(ii) insurance during operation;(iii) variable O&M;(iv) life of project- economic verses 30 years, PPA;(v) ROEDC;(v) equity redemption after debt period and ;(vi) interest rate fluctuation.
It was decided that a Working Group with members from following entities be constituted to revisit IGCEP criteria, in order to reflect actual cost of IGCEP: (i) CEO CPPA-G ;(ii) MD PPIB; (iii) CEO NPCC and ;(iv) MD NTDC.
The sources said an important aspect of quality construction was highlighted by Chairman WAPDA and Secretary Power Division. It was observed that no federal entity had oversight on the projects approved by the PPIB that go under construction. It was also observed that even approval process through Panel of Experts (PoEs) is not ensuring proper safeguards.
It was desired that as WAPDA had institutional history and know-how of hydel projects, an independent setup under WAPDA may be created to help PPIB in supervision of design and execution of hydropower projects from quality point of view over future life of projects and to identify and report any shortcomings to PPIB for appropriate action.
It was desired that a Committee be constituted to recommend the way forward to monitor quality of work of hydropower projects with the following members: (i) General Manager/ head of Water Resources Division, NESPAK- Lead; (ii) GM C&M, WAPDA; (iii) DG( Hydropower) PPIB; (iv) Manager Technical Hydel, CPPA-G; (v) GM (PSP) NTDC and; (vi) any co-opted Member.
It was further directed that PPIB shall devise a mechanism to increase visibility of construction activities during construction phase of the hydropower projects for ensuring completion of projects as per approved design and quality.
It was also decided that henceforth no further LoIs in relation to hydropower projects that intend to be connected to National Grid and electric power would be purchased by the federal entity, or shall be issued by provincial/ AJ&K governments until such guidelines are formulated and duly approved by the Federal Government.
The sources said, a Committee comprising the following members was also constituted ;(i) Director General (Law) PPIB (Lead); (ii) Director General (hydropower), PPIB; (iii) General Manager( Coordination and Monitoring), WAPDA;(iv) representative of SECP ;(v) representative of Intelligence Bureau (IB) and:(vi) representative of FIA.
The Committee held its meeting on November 28, 2023 wherein initial deliberations were made for way forward on the issue of LoIs.
Accordingly, it was decided that as a first step Provincial / AJ&K Governments should be requested to provide all relevant information/ data / documents related to each LoI issued for hydropower projects by them or their respective entities.
Copyright Business Recorder, 2023
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