US and WB likely to provide $300m for 50MW solar projects

Govt approves project on criteria that it will bear no financial liability.

ISLAMABAD:

At a time when the government is struggling to overcome the energy crisis, World Bank and the United States are likely to help out by providing $300 million for 50-megawatt pilot solar projects in Sindh and Punjab.

The federal government has given clearance to the pilot projects on the criteria that financial assistance will be provided from the Clean Technology Fund of World Bank and the government will bear no financial liability, according to documents.

Sources told The Express Tribune that the pilot projects will be a joint venture between DACC Associates, US and the two provinces. Pilot project refers to a scheme that demonstrates feasibility of a study before establishing operations on a large scale.

US will be responsible for arranging finances for initial cost of the project while the only contribution required from provinces is provision of land, sources further said.

DACC is already working on Pakistan Solar Energy project started in 2009 under which 2,200MW of clean renewable energy will be added to the national grid. The project will make DACC operators of the world’s largest solar energy project in the world. The plant is expected to generate its first megawatt in early 2012.

Provinces had approached the Central Development Working Party (CDWP) of Planning Commission for concept clearance to arrange foreign assistance for the projects. CDWP looking at the potential of the alternate energy gave the approval for the projects.

Independent Power Producers Advisory Council (IPPAC) Chairman Abdulla Yousuf told The Express Tribune that independent power producers are operating in difficult situation due to scarcity of funds but solar projects that require a one-time cost should be encouraged in this country.

Another source said that Alternative Energy Development Board (AEDB) had issued Letter of Intents to some investors that are interested in solar energy projects, adding that the progress after issuing letter of intents has been very slow due to some hurdles

The National Electric Power Regulatory Authority (Nepra) was also working on introducing upfront tariff for solar energy projects. The upfront tariff is a fixed rate an investor will get for generating a megawatt, previously negotiations were done for projects and each investor ended up getting a different rate.

Nepra recently determined upfront tariff for wind power projects to attract investment and reduce paper work process for projects. We expect Nepra to announce upfront tariff for solar energy projects in a week, sources maintained.

Published in The Express Tribune, October 30^th, 2011.