Centre, provinces on the outs again

Punjab, KP accuse federal government of sidelining existing solar projects

Zafar Bhutta January 10, 2023


Several reservations were expressed by representatives of the Punjab and Khyber- Pakhtunkhwa (KP) provinces on Monday, over the federal government’s plans to float bids for 6,000MW solar-powered projects. The federal government had recently approved a document to start the bidding process.

These objections were raised at a public hearing organised by the National Electric and Power Regulatory Authority (NEPRA) on Monday.

The provinces accused the central government of setting aside projects for which Letter of Intents (LoIs) had already been issued to investors. The investors in those projects had been facing hurdles for several years in setting up their solar plants.

Instead of resolving their issues, the government switched to a newer plan which was in violation of both the Alternative and Renewable Energy (ARE) and national electricity generation policies, they argued.

They said that the new plan to generate 6,000MW solar energy posed a threat to their existing solar plants in Category-III.

During the hearing, the KP representative said that the federal government should have held consultations with the provinces before finalising the plan. He contended that the electricity generation plans could not be amended without the approval of the Council of Common Interest (CCI). The federal government, he said, could not bypass the CCI in this regard as it went against Article 154 of the 2021 National Electricity Policy.

He further said that the existing 249MW renewable energy plants in his province were at stake as a result of the change in policies brought about by each regime.

Similar arguments were made by the Punjab representative. She said that the new plan was a departure from the ARE policy, and had to be approved by the CCI first.

She said priority should be given to the existing projects, as it took three years to acquire the LOIs and her government had already given land on concessional rates. The Punjab representative also complained about not being consulted on the matter.

Some participants in the hearing also opposed the government’s plan to lock the tariff for 25 years, arguing that the plan had not worked in the past as well.

Both the representatives maintained that the opinion of the federal law ministry was not binding on the provinces.

The law ministry had earlier said that the new plan was not in conflict with ARE or the national electricity generation policies.

In contrast to the objections raised by the provinces, however, CEO of the Alternative Energy Development Board (AEDB), Shah Jahan Mirza said that the new plan had been approved with consensus since all the provinces had secretarial representation on the AEDB board.

Mirza also said that there was no deviation from the existing policy and that the law ministry had not raised any objection to this plan.

Regarding the argument about locking tariffs that had resulted in losses in the past, Mirza said no investor would not take interest in the projects if tariffs were not locked for 25 years.

He also maintained that the Request for Proposal (RFP) document approved by the government was in line with the existing renewable energy policy.

“These solar plants will serve as a replacement for costly fuel, which was currently not affordable for the country,” he said.

The Power Division assured that category 3 projects would run in parallel with the new projects, which raised serious concerns for NEPRA.

The power regulator insisted that such a situation will create confusion and increase risk in the market, adding that investors will not feel secure financing a high-risk market.

“All investors should be given a level playing field to invest in renewable projects,” said NEPRA


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