ISLAMABAD: The government has banned fresh private sector investments in power generation on imported fuels owing to surplus capacities contracted so far that are enough to meet electricity demand beyond 2022.
As a consequence, the federal government has issued written instructions to the Private Power and Infrastructure Board (PPIB) not to extend expiring letters of intent (LoIs) and letters of support (LoSs) for existing proposals or issue new ones for power plants of imported fuel.
“No LoI or LoS be issued or extended by the PPIB for any power plant on imported fuel except agreed bilaterally by the Government of Pakistan with the Chinese government and are part of the priority list of China-Pakistan Economic Corridor projects,” read an order issued by Secretary Water and Power Mohammad Younas Dagha to the heads of PPIB and Central Power Purchasing Agency (Guarantee) Ltd.
The order said the power generation capping plan approved by the PPIB board was based on a presentation that already contracted power projects were enough not only to meet power shortages but also to provide reasonable surplus reserve.
It said that 2632 megawatts of new hydropower plants and 3960MW of coal-based power plants (both local and imported) and other renewable energy projects already under construction will bring in 13207MW of new generation capacity by end-2018. This is “sufficient not only to meet our power shortages, but also to provide comfortable spinning reserves”.
The order said it was also observed that the “power generation already financed and under various stages of execution will also bring further capacity of 20,380MW by 2022, bringing the total installed capacity to 53,405MW”.
On the basis of these commitments, “it was decided that no further financial commitments would be justified for purchasing power from the private sector, especially on imported fuels”, the order conveyed.
It was explained that although the decision was made on May 3 by the PPIB board and conveyed to the relevant agencies, the power ministry was displeased to know that PPIB officials were still encouraging private investors about further investments.
The ministry expressed displeasure that “PPIB officials were still giving mixed signals to investors about these decisions who are still pursuing this office for allowing the PPIB to facilitate more projects on imported fuels”.
Interestingly, the government had put a ban on setting up of power plants based on high-speed diesel because it is the most expensive power. However, the fresh ban on new investments for all the imported fuels — coal, furnace oil and liquefied natural gas — has been made by the board of directors of PPIB led by Minister for Water and Power Khawaja Mohammad Asif.
Published in Dawn, July 29th, 2016