PHOTO: PAKISTANTODAY
Hoping to provide lucrative incentives to a dilapidated power sector, the government has introduced a 10-year tax holiday to companies that invest in setting up electricity transmission lines.
The move is aimed at taking some of the pressure off tight state revenues when it comes to investing in power infrastructure.
The measure was announced by Finance Minister Ishaq Dar in his budget speech in which he said the initiative was meant to attract investment in transmission line projects.
However, the benefit is extended to only those projects that come online before June 30, 2018 – that means within three years.
“Personally, I think this is a good decision,” said Tahir Basharat Cheema, the former managing director at Pakistan Electric Power Company (Pepco).
“Right now, the transmission system covers just 45% of the country while the rest is catered to by distribution lines. We need to invest in this.”
Last year, a policy was introduced to encourage private investment in the construction of transmission lines, which are also needed to connect upcoming power plants with the grid, he said.
But there is a school of thought that believes power transmission business should remain with the government, he said.
“People who are sceptical say that state-run National Transmission and Dispatch Company (NTDC) should continue to play the role of arbitrator.
After all, commercial disputes involving private parties could be difficult to handle.”
NTDC oversees a web of 12,436km long 500kv and 220kv transmission lines in the country. It is responsible for its maintenance and investment in enhancement.
Cheema says competition between NTDC and the private sector on new transmission line projects could be an even better initiative.
Fatima Group, which is building Pakistan’s first independent power project (IPP) that will sell electricity directly to bulk consumers, has also become the first company to set up a transmission company.
The group has established a special purpose Fatima Transmission Company Limited (FTCL), which will build a 37-kilometre long double circuit transmission that will run over 150 towers.
Cheema said transmission projects do not take too long to materialise. “Three years are more than enough for carrying out studies, arranging funds and constructing transmission lines.”
Published in The Express Tribune, June 7th, 2015.
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