The government is considering lifting a ban on imported fuel power projects reportedly to "facilitate" those sponsors who failed to get the go-ahead during the tenure of Younas Dagha as Secretary Water and Power. Well-informed sources told Business Recorder that lifting the ban on imported fuel projects was recently deliberated at a meeting of the Cabinet Committee on Energy (CCoE) presided over by Prime Minister Nawaz Sharif.
The sources said the Ministry of Water and Power held successful negotiations with M/s Sidddiqsons and M/s Lucky Group to establish power projects based on local coal instead of imported coal on the plea that imported fuel projects would put pressure on forex reserves.
It is however unclear as to who is behind the current move to lift the ban on imported fuel projects but it appears as if the Punjab government is the most focused on imported fuel projects. The wording of the recent decision of the CCoE is as follows "Ministry of Water and Power and Finance Division will study reversal of the ban imposed by Government of Pakistan on setting up of new power projects on imported fuel, keeping in view projected additional demand and impact on decision on foreign exchange reserves".
According to sources, there is jubilation within the officials of the Private Power Infrastructure Board (PPIB) after receiving an indication that the government is considering lifting a ban on imported fuel projects. The sources said, PPIB officials had made an effort in the past to put pressure on the Ministry through investors for lifting of the ban, however the then Secretary Water and Power, Younas Dagha had issued a stern warning to these officials.
Dagha, in a letter to MD PPIB had cited a presentation which revealed that 3600 MWs LNG and coal based power plants (both local and imported) and other renewable energy projects already under construction will bring in 13,207 MWs of new generation by 2018 end, sufficient not only to meet the country's power shortages but to provide comfortable reserves. And further maintained that the power generation being financed and under various stages of execution will bring further capacity of 20,380 MWs by 2022 bringing the total installed capacity to 53405 MWs.
According to the letter, Dagha said that it was decided that no further financial commitments would be justified to purchase power from the power sector especially imported fuels. It, however, appears that PPIB officials are giving mixed signals to investors about these decisions and are still pursuing the new Secretary Water and Power to allow PPIB to facilitate more projects on imported fuels.
Dagha advised MD PPIB Shah Jahan Mirza that no LoI or LoS will be issued nor extended by PPIB for any power plant on imported fuel except those agreed bilaterally by Government of Pakistan with Chinese government which are part of the prioritised list of CPEC projects. Previously 1200 MW RLNG power plant for Muzaffargarh which was initially approved by the CCoE has been scrapped.
The source said the project came under discussion in the 108th meeting of the PPIB wherein the Board provided onetime exemption for this project from its earlier decision of May 3, 2016 regarding non-processing of power projects based on imported fuel in future. The Board in the same meeting also approved the draft RFP submitted to Nepra by PPIB and the framework with the provision to subsequently incorporate changes as per Nepra's benchmark tariff, guidance/confirmation on some key outstanding issues, inputs MoP&NR/ gas supplier, any decision by ECC/ CCoE/ Cabinet etc.
According to MD PPIB, 10 parties registered with PPIB and accordingly were issued RFPs for the project. However, no bid was received by the bid submission deadline of December 20, 2016. The then Secretary Water and Power stated that no further action was required in this matter.