The government has decided to invite bids from the private sector for building new medium-sized power plants of 100 to 250 megawatts with re-gasified liquefied natural gas (LNG) as fuel and cumulative production capacity of 1,000MW.
The Economic Coordination Committee (ECC) took the decision in a meeting held on January 29.
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The Ministry of Water and Power told the committee that the government was making concerted efforts to eliminate power shortages and was exploring all possibilities for a substantial addition to the country’s electricity generation capacity in the minimum time frame.
To achieve that goal, the government will stimulate private-sector investment in constructing new medium-sized power plants of 100 to 250MW and these will be run with the help of re-gasified LNG.
Their total production capacity will be 1,000MW and investors will be picked through international competitive bidding.
These plants will either be installed at the sites of old or abandoned power generation plants or in the vicinity of existing grid stations and transmission lines of the National Transmission and Despatch Company (NTDC) or electricity distribution companies.
The bidders will be required to offer a discount on the tariff set for re-gasified LNG-based power projects. Project sponsors must also start open-cycle operations by March 31, 2017 and commercial operations in combined-cycle mode by January 1, 2018.
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The water and power ministry said the planned projects would be processed and developed under the Power Generation Policy of 2015. The policy provides for standardised security documents for power projects developed by the private sector.
The security documents include an implementation agreement and a power purchase agreement containing provisions regarding legal and contractual framework for financial close, engineering, procurement, construction, commissioning, operation and maintenance on build, own and operate basis.
Drafts of the implementation agreement and the power purchase agreement are based on the standards approved earlier by the ECC for coal-based power projects of the private sector.
These are also in line with the specific requirements of re-gasified LNG-based power projects, the upfront tariff set by the National Electric Power Regulatory Authority (Nepra) and the parameters specified by the regulator.
The Ministry of Water and Power asked the ECC to approve the initiative and the framework for processing and implementing the planned power projects. It also sought the ECC’s go-ahead for the standardised implementation agreement and the power purchase agreement under the Power Generation Policy of 2015.
The ministry requested the ECC to empower the Private Power and Infrastructure Board (PPIB) and the Central Power Purchasing Agency (CPPA) so that they could make and approve any specific amendments in the implementation and power purchase agreements during negotiations provided the government’s obligations or liabilities did not increase.
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It said the PPIB and CPPA should be permitted to make and approve any amendments in these agreements in order to comply with Nepra’s tariff determinations.
The ECC accepted the ministry’s proposal and allowed the setting up of LNG-fired power plants by the private sector with cumulative capacity of 1,000MW. These are aimed at bridging the power shortfall to meet the government’s target of ending outages by December 2017.
Published in The Express Tribune, February 6th, 2016.
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