ISLAMABAD: The provinces have accused the Centre of intrusion into their constitutional jurisdiction and have protested recent decisions of the Cabinet Committee on Energy (CCoE) to their disadvantage.
At least two provinces — Sindh and Khyber Pakhtunkhwa — have put on record their protests and asked Prime Minister Imran Khan to reverse the CCoE decisions negatively affecting development of renewable energy sources and over $3 billion investments.
The protest is based on the CCoE decisions conveyed to the provinces on March 29 to discontinue with the Renewable Energy Policy of 2006 and its replacement with the yet-to-be approved RE Policy 2019.
“The CCoE has taken arbitrary policy decisions in violation of Article 154 of the Constitution by encroaching and transgressing into the domain of the Council of Common Interests,” said Sindh Chief Minister Murad Ali Shah in a hard-hitting letter to the prime minister, adding that the CCoE was a partisan forum where the provinces had no representation.
“Sindh would suffer the most from this decision as its 53 projects of 3,425MW — 28 wind projects of 1,875MW and 25 solar projects of 1,550MW — have been axed from the active list, depriving the province and the country of foreign direct investment of $2.3bn and loss of investors’ time of three years,” he wrote.
Cabinet committee accused of intruding into CCI domain
KP Chief Minister Mahmood Khan also protested the CCoE decision.
“The government of KP is concerned that the 2019 CCoE decision will, albeit inadvertently, not only jeopardise existing committed investment but also discourage further investment in the province, including the merged districts,” he wrote.
He sought “personal intervention” of the prime minister to exempt a number of projects from the CCoE decision to facilitate their completion as a special case on a priority basis.
He sought an urgent meeting with the PM to present a delegation of investors to explain losses they were set to suffer when the Pakistan Tehreek-i-Insaf was trying to rebuild the province and the recently merged tribal districts.
The Sindh chief minister explained that the CCoE decided that all the renewable energy projects that had already been issued letter of intent (LoI) but had not received a tariff from the power regulator would be dealt with the RE Policy 2019 and shall be allowed to proceed ahead through competitive bidding.
He said the Centre had neither issued any new RE policy nor any such draft was shared with the provinces and there existed no legal framework for competitive bidding. “The controversial decision would not only ruin the efforts of the provincial government for the development of renewable energy in the country but also shatter the confidence of sponsors of those projects who, after lengthy and cumbersome process, achieved several interconnected critical milestones and were hopeful of grant of tariff from Nepra and issuance of letters of support (LoS) from Alternative Energy Development Board (AEDB). Practically, the affected sponsors are back to square one.”
He demanded that all federal institutions, including the National Electric Power Regulatory Authority (Nepra), be directed to process all applications to whom the provinces had given LoIs under the 2006 policy and give them cost-plus tariff till such time competitive bidding-based tariff mechanism was in place. He also demanded that the CCoE be barred from transgressing into the domain of the CCI and in future it must not undertake any decision that may have policy implications.
The CCoE’s revised policy directives required that all future RE investments will have to be dealt with under the RE Policy 2019 which will clearly enunciate a framework consistent with current international market norms and greater consumer benefits. Also, any resource risk linked to RE projects currently in pipeline under the RE Policy 2006 and which conform to Nepra’s decisions taken in various tariff determinations dealing with such projects (resource risk for wind, solar and hydel) will be henceforth borne by the seller.
It also held that all processing of the subject projects would be linked with the date of grid interconnectivity as provided and confirmed by the National Transmission and Dispatch Company (NTDC) while projects given LoS by the AEDB would be permitted to proceed towards the achievement of their requisite milestones as per the RE Policy 2006. However, if more than one year has elapsed since determination of tariff by Nepra, the said tariff would be reviewed by Nepra to bring them in line with the prevailing market conditions and rationalisation of cost keeping in view the consumer interest.
All projects that have been issued LoIs and granted tariff by Nepra and issued a generation licence will be allowed to proceed towards the achievement of their requisite milestones as per the RE Policy 2006. However, if the tariff validity period has elapsed, Nepra will be requested for review of the same to make it consistent with the current market environment and consumer interest. In all these projects, grid connectivity date will have to be approved by the NTDC.
Published in Dawn, April 22nd, 2019