The Cabinet is said to have cleared tariff notification of 50MW M/s Gharo Solar Power Project on the reason that the company will sell produced electric power to K-Electric as Energy Purchase Agreement (EPA) will be signed by the company with KE at its own risk and cost, well-informed sources in the Power Division told Business Recorder.
Giving the background, the sources said that the National Electric Power Regulatory Authority (Nepra) determines tariff for power under section 31 of Regulation of Generation, Transmission and Distribution of Electric Act, 1997 (Nepra Act). The tariff determination is submitted to the Ministry of Energy, Power Division, for notification in terms of section 31(7) of the Nepra Act on behalf of the federal government.
The Nepra determined the tariff petition filed by M/s Gharo Solar (Pvt) Limited for determination of reference generation tariff in respect of 50MW solar power project. The Cabinet Committee on Energy (CCoE) on December 12, 2017 had decided the following; (i) only those projects shall be implemented out of the current list where either Implementation Agreement (IA) or Energy Purchase Agreement (EPA) has been signed already; (ii) all projects based on wind, solar, small hydel and baggasse energy will be awarded through competitive bidding. Risk of hydrology, wind speed and solar radiation will be borne by the seller; (iii) the balance 600 MW projects space available in Quaid-e-Azam Solar Park in Punjab for solar based power projects should be selected through competitive bidding without exception; (iv) the space available in the current evacuation scheme in the wind corridor will be awarded through competitive bidding without exception; (v) all future baggasse-based power plants should be awarded through competitive bidding and there shall be no-front tariff; (vi) the indication of all new small hydel power projects will be through competitive bidding and; (vii) all contracts arising out of a competitive bidding should be for a term of 15 years.
M/s Gharo Solar (Pvt) Ltd had requested Power Division for the issuance of tariff notification with a plea that as the company shall exclusively supply electric power to K-Electric Limited and that pursuant to the Energy Purchase Agreement to be executed with KE, the company shall not be entering into any agreement with CPPA-G. Further, the company does not hold any Letter of intent (LoI) or Letter of Support (LoS) from provincial or federal agency shall not be entering into an IA with the federal government.
Pursuant to the decision of the CCoE and the request of the project company, the case was referred to Law and Justice Division for seeking guidance/clarification on this issue. In response, Law and Justice Division conveyed that "the policy and subsequent amendments including CCoE decisions of December 12, 2017 related to the projects where LoI and LoS are to be issued by the Alternative Energy Development Board (AEDB), Power Purchase Agreement (PPA) is to be signed by the CPPA-G and payment guarantee is to be given by the government of Pakistan in the form of IA and Gharo Solar Private Limited will sell produced electric power to K-Electric and EPA shall be signed by the company with KE, at its own risk and cost. Therefore, the policy and amendments to it shall have no impact on Gharo Solar Project and that Ministry of Energy, Power Division, may notify Gharo Solar tariff as determined by Nepra under section 31(4) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997.
The sources further stated that for further clarification and settlement of issue, a meeting was called on November 1, 2018 in the Ministry of Energy under the chairmanship of Minister for Power Division Omar Ayub. The representatives of Ministry of Law, Nepra and AEDB attended the meeting and detailed discussion about Renewable Energy Policy 2006 and Gharo project was held. It was also submitted that as the project is not to provide electricity to the national grid and there is also no IA required to be issued by AEDB, while EPA is with KE not with CPPA.
It is worth mentioning that all other projects which were considered during the CCoE meeting of December 12, 2017 were to be connected to national grid, required an IA under the Renewable Energy Policy 2006 and an EPA with CPPA-G as the only buyer of energy.
The Gharo Solar Private Limited had also submitted the undertaking which is as follows: "The company undertakes that, as the project does not fall within the ambit of the RE Policy 2006, the company shall not avail incentives under the said policy, except for any incentives available otherwise (eg, tariff, income tax ordinance, customs/sales tax act, etc)."
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