PESHAWAR: The Khyber Pakhtunkhwa government has approved a proposal to restructure the Pakhtunkhwa Energy Development Organisation (Pedo) and form the KP Power Company Limited (KPPCL).

An official of the energy and power department told Dawn on Friday that Chief Minister Pervez Khattak had accorded the approval to the summary few days ago.

He said following the summary’s approval, the KPPCL would turn the existing power stations into companies before using them as sureties to finance more energy projects in the province.

The summary was moved by the energy and power department around six month ago under the title of KP Power Holding Company and Special Purpose Vehicles.

In order to overcome issues faced by the Pedo and fully exploit power generation potential of the province, mobilise additional resources for power sector and run power generation sector on modern corporate lines, the Energy Apex Committee, in its meeting held on June 6, 2015 approved the plan to set up the KPPCL and SPVs.

According to the summary, in the first phase, the KPPCL and SPVs will be established and an assessment will be carried out regarding the need for formation of KP Electric Power Regulatory (Kepra) and KP Private Power Board (KPPPB) before the launch of the second phase in which these organisations will be set up.

The KPPCL with the authorised capital of Rs5 billion and paid up capital of Rs2.5 billion will be established by getting it incorporated with Securities and Exchange Commission of Pakistan (SECP) under Companies Ordinance 1984.

It says that the amount required for the paid up capital, SECP fees and other relevant arrangements may be provided from the Hydel Development Fund (HDF) after funds board approval.

It also proposes of SPVs for the power projects including Malakand III, Pehur, Reshun, Shishi, Machai, Ranolia, Daral Khawar, Koto, Jabori, Karora, Lawi and Matiltant power company limited.

It says that KPPCL will own equity in each of the above SPVs on behalf of KP government. “Authorised capital for each SPV will be Rs3 billion and paid up capital will be a function of project cost,” it reads, adding that no cash injection is required for Malakand III, Pehur, Reshun and Shishi power houses, as these are already functional projects.

For remaining SPVs, it says that funds have already been allocated through Annual Development Program (ADP) and HDF will be injected into relevant SPVs through KPPCL, while cost of incorporation of these companies may be borne through HDF after fund board approval.

It also suggested the formation of a 14 members board for the KPPCL to be headed by Mr. Shakil Durrani, while the secretaries of energy and power, finance and planning and development departments will be its members among others.

The Pedo chief will act as the board director and secretary.

It says the Sarhad Hydel Development Organisation (SHYDO) was established in 1986 to identify and develop hydel projects in KP and it was converted into an autonomous body through SHYDO Act 1993 and renamed as Pedo.

The document said by establishing the Pedo, KP government indicated its intention to create an organisation with corporate management for the purpose of development of hydel, solar, wind and thermal power plants in the province. “Like other such autonomous bodies; however, the organisation has morphed into a quasi-attached government department with inefficiencies and rigidities in operations, the employees bound by government grades, no reward and punishment system, breakdown of performance evaluation system and sub-optimal decision making,” it said.

It said currently, the Pedo is involved in identifying sites and awarding engineering, procurement and construction (EPC) contracts for hydel projects. The approach is extremely passive and reactive and does not aggressively seek to tap hug e hydropower potential of the province and as a result, only 105 megawatts have been brought online in last 30 years,” it said.

It said currently, the Pedo does not deal with licensing of generation, transmission and distribution of electric power, tariff determination and prescription of standards and rules for conduct of business.

“There is no one-window facility for implementation of independent power producer and public-private partnership modes and there were no business development activities carried out by the Pedo,” it said, adding that organisation has also not been able to finance projects through innovative approaches.

When contacted, Pedo CEO Akbar Ayub Khan said he was not aware of the summary’s approval.

Published in Dawn, January 30th, 2016