Pakistan Electric Power Company (Pepco) will release Rs 12 billion in a couple of days to independent power producers (IPPs) to clear the circular debt. Pepco Managing Director Tahir Basharat Cheema, addressing a press conference here on Saturday, that out of Rs 180 billion circular debt, Rs 80 billion had been retired in March and the remaining would be cleared by the end June.
He said that subsidy was being gradually reduced, and added that there should be no subsidy in future because it had created problems like circular debt. Cheema further said that the discussion was under way with the business community to introduce the staggering of holiday system for the industry as being followed by some of the units.
Two industrial states of Lahore had agreed to follow the staggering system of holidays and the talks were under way with the remaining business units, he said, and noted that the Pepco entered into agreements with the textile and sugar industry to get 600 MW electricity from the captive power plants.
The Pepco chief said that the IPPs were maintaining the sufficient furnace oil stock, and added that despite financial crunch last year, the IPPs had co-operated with the government by continuing power generation to meet the country's requirements.
He also ruled out that the employees of Water and Power Development Authority (Wapda) were having facilities like free power supply etc, but their salaries were monetised. "The Pepco has formed the revenue task force that will monitor the employees' performance and efficiency pertaining to revenue generation," he said, adding that old meters would be replaced with the new small meters that would be provided to the consumers free of cost. These meters would block the theft of electricity.
He said that work on the Diamer Bhasha dam would start during the next year. He said that the contribution of thermal power generation was 70 percent against 30 percent hydel power generation. In the long-term policy, the government would bring the hydel power generation to 70 percent and thermal power generation would be reduced to 30 percent.
Cheema said that Pakistan had identified hydropower potential of over 54,000 MW and proven coal reserves of 185 billion tons in Thar had power generation potential of 100,00 MWs through 536 million tons per year. Pakistan confirmed wind energy potential was more than 346,000 MW, he added.
According to a presentation given by the Pepco Managing Director, the direct foreign investment (DFI) was expected through the participation of Chinese companies in the development of solar projects and the government of Pakistan would provide full facilitation through the AEDB.
Chinese banks and financing institutions may finance the commercial projects through debt and equity sharing for commercial solar power projects. Collaboration is expected between Pakistani and Chinese engineering industries for manufacturing of cells in Pakistan. Wing mapping, conducted by the National Renewable Energy Laboratory (NREL), USA, in collaboration with the USAID, has indicated a potential of 346,000 MW through wind resource in Pakistan.
The Gharo-Keti Bandar wind corridor, spreading 60 kilometres along the coastline of Sindh province and more than 170-kilometre deep towards the land alone has a potential to generate 50,000 MW of electricity. To promote Chinese equipment, the government of China may give export credit to its OEMs.
Collaboration in wind turbine manufacturing between Pakistani and Chinese engineering industries is expected for manufacturing wind turbines in Pakistan. According to the government incentives, there is guaranteed electricity purchase, grid provision is the responsibility of the purchaser and protection against political risk is ensured.
The other incentives are attractive tariff (cost plus 15 percent ROE), indexed to inflation and exchange rate variation (rupee/dollar), euro/dollar parity allowed and carbon credits are available, no import duties on equipment, exemption on income tax/withholding tax and sales tax, repatriation of equity along with dividends freely allowed and permission to issue corporate registered bonds.