Govt to lift ban on imported fuel-based power plants

It wants to resume work and place Rahim Yar Khan project in CPEC list

Zafar Bhutta May 13, 2017

ISLAMABAD: The government has decided to lift the ban on setting up new power plants based on imported fuel in an attempt to resume and step up work on an abandoned imported coal-fired project planned under the China-Pakistan Economic Corridor (CPEC).

A senior official in the Ministry of Finance told The Express Tribune that the Ministry of Water and Power and the Finance Division were working on a study to withdraw the restrictions on new imported fuel-fired power projects keeping in view the projected increase in demand.

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In July last year, the government had slapped the ban on developing new imported coal and liquefied natural gas (LNG)-based power plants to ease the pressure on foreign currency reserves.

The decision had a double impact as it would restrict the outflow of foreign currency in the shape of import bill as well as prevent the repatriation of profits and dividends by project sponsors.

Following this move, the Ministry of Water and Power informed the Private Power and Infrastructure Board (PPIB) that the government had also stopped approvals for power plants based on other imported fuels such as furnace oil and high-speed diesel.

The ministry asked the PPIB to stop issuing Letter of Intent (LOI) to new imported fuel-based power plants except for the projects mutually agreed between governments of Pakistan and China or those listed in the CPEC programme.

The curbs had also sparked concerns among provinces where work on new power schemes, which were not included in CPEC, came to a halt. Provinces were of the view that the decision would jeopardise investments from the private sector.

The move harmed three projects of 660-megawatt each in Rahim Yar Khan and Muzaffargarh planned by Kot Addu Power Company, Nishat Energy and China Machinery Engineering Corporation.

Now, the government wants to restart work on the imported coal-fired power project in Rahim Yar Khan and place it again in the CPEC list.

“In order to implement this project, the government has decided to remove the ban on new power projects based on imported fuel,” a senior government official commented.

Terming it a very critical project, the Punjab government had underlined the need for resuming work on the Rahim Yar Khan power plant, which was earlier included in CPEC, but was abandoned later due to coal transportation hurdles.

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The provincial government took up the matter with the minister of railways, who gave assurances to the province that the required railway infrastructure could be made available before the completion of power plant.

Consequently, the Punjab administration asked the federal government to immediately add the project to the CPEC list.

Published in The Express Tribune, May 13th, 2017.

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