Energy future hinges on renewables

Updated August 23, 2019

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ISLAMABAD: As part of the final round of consultations on new renewable energy policy, the federal and provincial stakeholders could not agree on Thursday about the future of 140 projects of more than 8,000MW generation capacity envisaged under the previous policy.

The two-day consultative process started on Thursday and was attended by representatives of the Power Division, provincial governments and their agencies and companies concerned besides the power regulator and the Pakistan Engineering Council.

The provinces agitated the issue of providing a way out to those investors who had been given letters of intent and support by the provinces and many of them were in various stages of the tariff approval process when the Cabinet Committee on Energy (CCoE) in the previous government stopped implementation on 2006 policy.

Under the CCoE decision, renewable energy projects would be accepted only through competitive bidding for specific generation capacities.

The provinces and other private stakeholders wanted the new policy to accommodate those past investors after having spent a lot of time and money in the new policy as had been the case in all the past power policies and petroleum policy to allow existing investors to adopt new regime with cost plus tariff formula subject to certain conditions.

The federal government informed the provincial governments that the new policy was now in final stages, had been supported by lending agencies and could not be held back to accommodate 2006 policy investors who could be considered separately and on examination of their cost-benefit analysis.

The sources said the provinces also warned the federal agencies that they would be left with no option but to raise objections over the new policy when it was taken up for approval at the level of Council of Common Interests (CCI). A dispute at the ultimate forum under the constitution to adopt the policy could have negative repercussions unless the projects awarded by provincial governments under the independent power producer (IPP) mode were covered in the new policy to safeguard the interests of the provinces.

The first day of the consultations was co-chaired by Prime Minister’s Task Force on Energy Chairman Nadeem Babar and Power Division Secretary Irfan Ali where the Alternate Energy Development Board (AEDB) CEO Rana Abudul Jabbar Khan introduced the draft on the new Renewable Energy Policy.

Power Division secretary said the new policy had been developed in the light of present day situation when the technologies on one side were fast developing while on other side the cost was continuously going down. He said the country’s electricity basket is hugely tilted towards thermal imported fuels and emphasised that the new policy envisages increasing the share of renewable energy from around 4 per cent to 20pc by year 2025 and 30pc by year 2030.

Underscoring the importance of renewable resources and their optimal utilisation for generation of electricity, he said that from the prospect of attaining energy security and decreasing the impact of current thermal generation on environment, Pakistan needed to develop and harness to the maximum level its indigenous renewable energy resources.

He said that a steering committee of the federal and provincial governments would be created so that provinces had greater role in major decision making regarding planning and feasibilities of projects.

Babar explained to the participants the basic driving force behind developing the new policy and said 40pc electricity generation in the fiscal year 2018-19 was based on imported fuels which was highly unsustainable for the country’s economy especially when there was abundance of indigenous resources at disposal.

Moreover, he highlighted that the capacity payments to thermal IPPs during the last fiscal year has almost eaten up efforts of present government against theft and recovery drives resulting in highest ever recovery figures. Similarly, the carbon foot print of the country at present cannot be ignored especially when Pakistan was among the top 10 countries at the highest risk of environmental changes.

The PM’s Task Force on Energy chairman also highlighted the fast growth of technologies in the renewable energy sector that further support the current government’s plan to harness the country’s potential to the maximum.

“The discussion on policy will continue for two days enabling the AEDB to finalise its draft for placing the same before federal cabinet for its approval to place it before the CCI for its final approval”, the Power Division said in a statement.

Published in Dawn, August 23rd, 2019