Renewable power projects face axe as loadshedding ends

Updated Dec 14 2017


A view of Jhimpir wind power farm in Sindh.
A view of Jhimpir wind power farm in Sindh.

ISLAMABAD: The government would be under no obligation for any renewable project lacking firm contract by Dec 10 as era of loadshedding ends with surplus generation capacity, said Federal Minister for Power Awais Ahmad Khan Leghari.

Speaking at a news conference on Wednesday, the minister castigated critics challenging continuation of power shortages in many parts of the country saying they were only spreading propaganda.

“I humbly stated a few days ago that loadshedding has ended. Today, I am 10 times louder with that statement and tomorrow would repeat 20 times louder that there is no more loadshedding,” he said, adding the government would launch within days a computer application that would help everyone anywhere on phone to check supply situation at any feeder.

The minister said the government would not provide 24/7 electricity where losses were high because that would increase the cost and put additional burden on the people and increase circular debt from Rs135 billion a year to Rs280bn.

He said there was no loadshedding on about 5,800 feeders having less than 10 per cent theft out of 8,600 feeders.

He said the government wanted to take benefit of the cushion in higher generation than demand to cut down on tariffs and provide relief to the people as promised by the PML-N. “We have now entered a new phase where we feel the need for revision in policies for the power producing companies based on two to three months of serious assessments and thought process,” he said.

Mr Leghari said the Cabinet Committee on Energy (CCoE) led by Prime Minister Shahid Khaqan Abbasi had allowed the change in policy for all renewable and alternative energy sources including wind, solar, biomass, bagasse and small hydropower projects below 50MW capacity. Under the new policy, the existing upfront tariffs and those based on cost plus profit rates offered to attract private investors would be replaced with competitive bidding based tariff.

He said the government would announce a chunk of capacity in a specific year based on absorption capacity and seek bids. The government would purchase electricity from the bidder offering lowest tariff. He said the provincial governments would also be sensitised to promote renewables in proportion to their population and ensure that these generations are not concentrated in a specific area.

The minister sidestepped a question why the small hydropower investors and potential in Khyber Pakhtunkhwa and Azad Kashmir were being disadvantaged while the government was still committing mega projects on imported fuels like LNG and coal from Middle East and Australia, but said there was no legal obligation on the government on the basis of letters of interest (LoIs) and letters of support (LoSs) if small hydropower projects (SHPPs) had not signed implementation agreements. “These power plants entailed around Rs12 per unit tariff,” he added.

He said the National Policy for Power Co-Generation by Sugar Industry (Co-Gen Policy 2008) had been rescinded with immediate effect since this was already covered under Renewable Power Policy 2006 and amended in 2013 that specified mandatory purchase of electricity and hydrology risk for small hydropower projects was on the power purchaser (the government).

Likewise, the renewable policy required that wind speeds and solar risks be borne by power purchaser and tariffs. He said the upfront wind tariff had come down to Rs6.74 per unit from Rs17 per unit. Likewise, bagasse tariff was now down to Rs7.97 per unit from Rs10.73 per unit.

He said the change in policy was expected to bring tariffs further down through competitive bidding and more competitive electricity market would emerge. Under the revised policy, the risk of variability in speeds for wind power projects, solar irradiation for solar plants and hydrological risk for small hydro projects shall be borne by the power producer.

The minister said the government would within a few weeks offer 400MW capacity for wind projects at Jhimpir-Sindh and 600MW solar units at Quaid-i-Azam Solar Park in Punjab for open, transparent and competitive bidding so that a select group could not monopolise capacity.

Responding to a question, he said the power tariff should have been cheaper by Rs2.25 per unit by now if the government was not compelled under the law to offer higher net hydel profits to the provinces. He said the average tariff currently stood at Rs11.4 per unit excluding surcharges and taxes and should have been down to Rs9.2 per unit.

Published in Dawn, December 14th, 2017