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Sindh asks Centre to rescind unilateral changes to energy policy

Updated January 17, 2018

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Windmills turning at a Jhimpir wind farm in Sindh. The federal government is refusing to extend sovereign guarantees for new power projects being implemented by the provinces, citing sufficient generation capacity in the country.
Windmills turning at a Jhimpir wind farm in Sindh. The federal government is refusing to extend sovereign guarantees for new power projects being implemented by the provinces, citing sufficient generation capacity in the country.

ISLAMABAD: Saying that the federal government is transgressing the powers of the Council of Common Interests (CCI), the Sindh government has asked the centre to “rescind unilateral changes” to the energy policy that are affecting the development of domestic sources of power generation.

“Any policy decision by the Cabinet Committee on Energy (CCoE) on electricity is a clear transgression and infringement into the domain of the CCI,” wrote Sindh Chief Minister Murad Ali Shah to Prime Minister Shahid Khaqan Abbasi.

He added that unilateral and arbitrary decisions by the CCoE had created an alarming situation that was adversely affecting provincial interests.

He called upon the prime minister to “rescind these decisions of the CCoE in public interest and place the matter before the CCI for consideration and decision” and asserted that provincial interests on energy would be safeguarded in the future.

This comes after similar concerns were expressed by Khyber Pakhtunkhwa and Azad Jammu and Kashmir governments when the CCoE decided to do away with guaranteed purchases and upfront tariffs for renewable energy sources, like wind, solar, bagasse and small hydropower, because of surplus capacities contracted through conventional power generation.

KP, AJ&K voiced similar concerns when federal govt decided to end upfront tariffs for renewable energy sources

In a letter to Mr Abbasi, Mr Shah reminded him that electricity appeared at Entry No 4, Part II, Schedule IV of the federal legislative list of the constitution and that the CCI was the only constitutional forum to decide such policy issues.

He specifically protested about a CCoE decision of Dec 12, 2017, conveying several amendments to Renewable Energy Policy 2006 (Framework 2013). “The government of Sindh has serious reservations on these decisions of the CCoE, which would cast a serious blow to all its earlier efforts for the development of renewable energy in Sindh,” he wrote.

Mr Shah said the CCoE decisions would hinder future investment in the renewable sector and hurt local and foreign investors to whom the provincial government had already awarded letters of intent (LoIs) and allocated land. As a consequence, they could file petitions in court for compensation.

He particularly mentioned that the Jhimpir-Gharo wind corridor, which was the only commercially viable corridor in the country with a capacity to produce over 50,000 megawatts, would be the worst affected.

Conveying the Dec 12 decisions of the CCoE, the Power Division had told the provinces that only those power projects would be implemented out of the current list of which either the implementation agreement or the energy purchase agreement had already been signed.

Regarding amendments to the Renewable Energy Policy 2006 (Framework 2013) submitted by the Power Division, the CCI had decided that all projects based on wind, solar, small hydel and bagasse energy would be awarded through competitive bidding.

Risks of hydrology, wind speed and solar radiation would be borne by the power seller from now onwards instead of the purchaser (the government entity under the 2006 policy).

The CCoE had also decided that the balance of 600MW space available in the Quaid-i-Azam Solar Park in Punjab would be selected through competitive bidding without exception. The space available in the current evacuation scheme in the wind corridors would be awarded through competitive bidding without exception. Likewise, it ordered that all future bagasse-based power plants should be awarded through competitive bidding, adding that there would be no upfront tariff.

Similarly, the induction of all new small hydel power projects would also be through competitive bidding. All contracts arising out of competitive bidding would be for 15 years.

Soon after the CCoE decision, the KP chief minister had threatened to boycott constitutional forums, like the CCI, saying the manner in which energy issues were dealt at the federal level was unacceptable.

The KP chief minister had also asserted that the CCI was one of the constitutional forums where “all subjects contained in Part II of the Fourth Schedule are to be discussed, dilated upon and decided. Electricity as well as oil and gas are such subjects, but instead of involving provinces in important policy matters concerning energy, matters are being directly taken to Economic Coordination Committee and the CCoE, which is a glaring violation of Article 154 [of the constitution]”.

Published in Dawn, January 17th, 2018