ISLAMABAD, Oct 24: The government on Thursday announced Power Policy 2002, aimed at bridging the supply-demand gap of around 800mw in the short term and over 5,500mw in the long term.

It was announced by Secretary Water and Power Mirza Hamid Hassan and Private Power and Infrastructure Board (PPIB) Chairman Zafar Ali Khan at a joint press conference here on Thursday. The policy has revived the role of the PPIB in the award of projects.

Hamid Hassan, describing the policy as an investor-friendly, said it was prepared in the light of experience of the past two policies.

He said the new policy had laid emphasis on the development of indigenous resources of coal and gas, and discouraged the private power projects based on the imported fuel.

He said that under the new policy the government would not allow any free import of machinery and plant which could be manufactured locally.

Giving details of the fiscal concession offered by the new policy, he said custom duty at the rate of five per cent would be charged on the import of plant and equipment not manufactured locally.

The plant installed under the policy would also be exempted from the sales tax, whereas the project based on imported fuel would have no exemption from the income tax.

The secretary said that to encourage the provincial governments for developing hydel resources, and facilitating the foreign and private investment in these projects, a provision for the payment of water-use licences had been introduced in the new policy.

The provincial governments, he said, would generate sufficient funds from charging a fee on the issuance of these licences.

In reply to a question, he said the policy of 1995 was not a complete failure as it had attracted the investments of over $4 billion in the country and had helped in installing the power generation plants having total capacity of around 6,000mw.

He recalled that in 1995 the cost of fuel was Rs3,000 per ton which had shot up to Rs13,000 per ton, resulting in the sharp increase of electricity tariffs in the country.

“We would have been facing load-shedding even now had we not allowed private power producers to set up plants,” he said.