Facilitating enterprise: Hydropower policy to attract investors

PESHAWAR:

The K-P Hydro Power Policy 2016, approved by the Cabinet on February 4,  aims to attract the private sector to invest in the province, an official of the K-P Energy and Power department told The Express Tribune on Saturday.

According to the official, the policy was constituted on the footprint of the federal government’s power policy as the provincial government could deviate from the Centre. It also proposed reducing the water usage charges from Rs0.48 kilowatt per hour to Rs0.425 kilowatt per hour, he said.

Regarding the decrease in the water usage charges, the official said, “The earlier rates were high in K-P as compared to the federal government’s rates. As a result, the investors suffered a loss in the rate of returns but now we have made it in line with the Centre.”

The official said K-P has potential and the investors are ready to invest in the sector because of the high return on investment.

As part of the policy, the projects have been divided into three categories based on studies, preparation and engineering information about the sites.

The first category of sites involves raw hydropower projects which are identified by the investors. However, the feasibility study and detailed engineering designs are not available with the government. For these sites, the investors will be required to conduct a feasibility study on their own cost and resources which would be monitored by Pakhtunkhwa Energy Development Organization (PEDO) experts. These sites will be awarded on a first-come-first-serve basis.

The second category is the semi raw sites which are identified by PEDO on pre-feasibility study and these projects would be awarded to the highest ranking applicant.

For the third category, sites which are identified projects with complete feasibility studies will be awarded through a bidding process.

Under the policy, all hydro-power projects in K-P where power stations are located will be implemented on Build Own Operate Transfer (BOOT) basis and shall therefore be transferred to the K-P government or its entity at Rs1 at the expiry of concession period. The concession period will not be longer than 30 years since the commercial operation date of the project.

The corporate power generation companies will be allowed to issue corporate bonds and 100% foreign ownership. PEDO will provide support and facilitation to the investors or it can also acquire land and then lease it to the project company.

PEDO will also make arrangements for the external security for the projects. It will also help the project companies in getting approvals for the environmental, social economic studies and assessments of the projects.

The policy also offers an attractive return on equity for the investors in the tariff by National Electric Power Regulatory Authority (NEPRA) or the K-P government.

It also gives exemption from income tax, including turnover tax and withholding tax on imports, exemption from sales tax on plant, machinery and equipment, exemption of provincial sales tax, concessionary rate of 5% custom duty on import of plant and equipments not manufactured locally.

Published in The Express Tribune, February 7^th, 2016.