ISLAMABAD, Sept 14: The government has decided to give permission for setting up independent power projects (IPPs) based on gas, oil and dual fuel on the basis of international competitive bidding and to do away with the system of secretaries’ committee approving such projects.

Sources told Dawn on Thursday that a paper was being prepared for the forthcoming meeting of the cabinet’s Economic Coordination Committee to incorporate the changes into the 2002 power policy.

The sources said the government had barred the Private Power Infrastructure Board from allowing oil- and gas-based projects without prior approval of the cabinet in view of increasing number of projects based on imported fuel.

According to the draft, the projects will be awarded on the basis of international competitive bidding wherever natural gas is made available by the producers to the government and the government allocates it for the power sector. International competitive bidding basis will also apply to oil or dual fuel projects. All projects for which feasibility report has been prepared will be offered to the private sector on the same basis.

Exemption from income tax will be extended to dual-fuel power projects.

For raw-site hydel and coal projects, expression of interest will be invited through advertisement in the press and sponsors who submit the best proposal, as decided by the PPIB, will get letter of interest for feasibility study.

The government has decided to do way with the secretaries’ committee for processing and approving IPPs and empowered the PPIB to directly receive the proposals and process them.

The new policy calls for the processing of all wind, solar and other renewable fuel based projects by the Alternate Energy Development Board even if its generation capacity is more than 50 megawatts. Currently, the board can handle such projects of up to 50MW.

The revised policy provides for extending government guarantees to all power projects irrespective of their capacity, provided that the power purchaser is a federal entity and its tariff is approved by the National Electric Power Regulatory Authority. The licence period for hydropower projects will now be up to 50 years instead of 35 years.

The government will no longer provide sovereign performance guarantees on behalf of Pakistan State Oil, the Oil and Gas Development Corporation or any other fuel supplier but continue with such guarantees for federal power purchasers.

The new policy will allow exemption to oil-fired power projects from income tax, including minimum tax on turnover and withholding tax on imports.