ISLAMABAD: The Ministry of Water and Power is seeking opinion of the Law and Justice Division on the way forward for the merger of the Private Power and Infrastructure Board (PPIB) and Alternative Energy Development Board (AEDB) to secure $400 million foreign loans.

The merger of the two agencies working under the ministry is a condition of the Asian Development Bank (ADB) and French Development Agency (AFD) for $300m and $100m loans, respectively.

The PPIB was established in 1994 as a “one-window facilitator” for private-sector investments in the power sector, particularly those relating to hydropower, thermal, coal and gas-based plants, through an executive order. It was given legal cover in 2012 through an act of parliament. It has about 95 staff members.

Of late, it has also been entrusted with the implementation of a transmission line project. So far, it has been instrumental in the completion of about 9,000 megawatts of power plants since 1994. Besides, about 19,000MW of additional capacity is currently in various stages of implementation.

Likewise, the AEDB was set up in 2003 for the promotion of alternative and renewable sources of energy, like solar, wind and bagasse, and was given legal cover through an act of parliament in 2010. It was asked by the government to increase the share of renewables in total electricity supply to at least 5pc by 2030.

The board is reported to have processed around 1,500MW of renewable power projects under various stages of completion. The staff strength of the agency is about 105.

Since the two institutions were set up under the acts of parliament, the power ministry has sought advice from the law ministry for a swift way forward, as desired by the Ministry of Finance, to meet the condition of the international lenders.

Informed sources said the process may extend beyond the next fiscal year because of approvals required from the cabinet and its Economic Coordination Committee (ECC). It will also require another act of parliament to replace the existing two acts.

The sources said attempts were made twice in the past during the PPP and Musharraf governments to merge the AEDB with the PPIB to create synergy and attain staff efficiency. But the process could not be completed for different reasons.

A power ministry official said the merger of the two agencies was one of many prior actions that the ADB had set for the approval of the third tranche of the energy-sector reforms programme. The sources said the AEDB is losing steam of late mainly because of a duplication of its work.

The provinces took over the role of processing renewable energy projects at the provincial level while licensing and tariff issues are being dealt with by the National Electric Power Regulatory Authority (Nepra). The lending agencies thought it had become redundant after the establishment of provincial agencies for renewable energy sources.

The government already approved a few days ago a model tripartite power purchase agreement for the sale, purchase and payments by the generation, transmission and distribution of electricity companies under another condition of the lending agencies.

The government is trying to materialise the disbursement of around $700m before the end of the current fiscal year from the international lending agencies to support the balance of payment position.

Published in Dawn, May 13th, 2017