HYDERABAD: The Sindh government has once again urged the federal government to ensure merit, transparency and judicious decision-making while approving the Indicative Generation Capacity Expansion Plan (IGCEP) 2021-2030 so that the dream of availability of affordable, secure and sustainable electricity to consumers could be realised.
Sindh Energy Minister Imtiaz Ahmed Sheikh took exception to exclusion of a larger component of the World Bank-funded Sindh — the 400MW Solar Park Project near Manjhand in Jamshoro district — besides ignoring five wind projects of 275MW in IGCEP.
Tariff for these projects, to be installed in Thatta and Jamshoro districts, have already been approved.
Minister calls for transparency in finalising new power generation capacity extension plan
In a letter dated Sept 12 and addressed to the federal energy minister and the National Electric Power Regulatory Authority (Nepra) chairman, Minister Sheikh stated that the National Transmission and Dispatch Company (NTDC) and Ministry of Energy (MoE) (Power Division) prepared Input Assumptions of IGCEP and presented to the Cabinet Committee on Energy (CCoE) on April 20, which were approved on April 22 by the CCoE and ratified by the cabinet on April 27.
Subsequently, IGCEP 2021-30 was submitted by the NTDC to Nepra. “We appreciate Authority’s wisdom [that] the said IGCEP was not approved due to various concerns of public and private stakeholders. The document was returned to NTDC for rationalisation and optimisation,” he said.
His letter added that in the 47th meeting of the Council of Common Interests (CCI) held on June 21 it was observed that provinces were not consulted by MoE (Power Division) and CCoE while finalising Input Assumptions of IGCEP.
Accordingly, it was decided that the CCI shall approve Input Assumptions based on consultation with provinces.
He said in compliance with the CCI decision, MoE (Power Division) held consultative sessions with provinces and finalised IGCEP Input Assumptions and those Input Assumptions were approved by the CCoE on Aug 25. A summary was forwarded for the 48th CCI meeting for approval.
He said: “It is worth mentioning MoE did not take into account comments and concerns of Sindh. For instance, local coal and renewable projects initiated by the Sindh government, which complies with competitive and least-cost principle, are not considered in IGCEP.”
Instead, he said, relatively higher cost projects were picked as committed projects. An analysis was done to show potential financial impact for not choosing cheap projects on least cost principle.
He said 10 hydro electric power projects with cumulative capacity of around 5,247MW were added in the committed category of IGCEP when compared with IGCEP iteration of 2020.
In the 10 projects, five projects were large hydro projects (ranging from 48MW to 4,500MW). As per latest determination of Nepra, lowest levelised tariff of large hydro projects is around US cents 7/kWh.
He said five wind projects (of Sindh) had been awarded tariff by Nepra before formal notification of the Alternate Renewable Energy (ARE) Policy 2019 with 275MW capacity and these were awarded average levelised tariff of around US cents 3.40/k1Vh.
“These projects are not considered in IGCEP on the pretext that they were placed in category-III of the CCoE decision. Leaving aside these low-cost wind projects and prioritising hydro projects, there will be increase in generation cost of total basket with stipulated potential impact of approximately $35 million per year and approximately $875m over life cycle of projects.”
He stated that IGCEP assumptions affirmed criteria projects whose PC-I were approved and funding secured (as of March 2021) shall be taken as committed projects. But, the World Bank-funded project of Sindh — Sindh Solar Energy Project (consisting of a component of 400MW solar power projects) whose PC-I was approved by Ecnec was not completely included in IGCEP as 50MW was reportedly being considered and remaining 350MW were been ignored.
He said excluding solar projects (US cents 3.5/kWh) there would be increased generation cost of total basket with stipulated potential impact of approximately $21m per year and approximately $525m over the cycle of projects.
He mentioned sponsors of M/s Oracle (a Thar coal project of block-VI) undertook to develop its 7.8 MPTA mine at a coal tariff of US$36/tonne for first 15-years followed by USD 27/tonne in next 15-years.
Use of Thar coal
With this coal price, Block-VI will generate electricity by establishing 1,320MW power plant at a proposed levelized tariff of 5.45 US cents per kWh (above calculations and financial modelling are proposed in writing by sponsors and submitted to the Sindh government and Power Division).
He said the ARE Policy 2019 envisaged renewable energy (RE) targets for future generation mix would have 30 per cent share of renewables by 2030, which supported inclusion of renewable energy projects of the Sindh government.
He said the additional benefits of indigenisation through use of Thar coal had not been factored in IGCEP. Increased use of Thar coal would be instrumental for coal gasification and urea production thus they were essential elements for future energy and food security.
He said considering importance of IGCEP and concerns by public and private sector stakeholders and its impacts on consumers, proposed IGCEP should have stakeholders’ input and thorough deliberations at a regulatory forum. It was obvious the MoE must have acted on its own and whims in classifying projects and excluding committed projects contrary to the CCoE and CCI discussions.
He said IGCEP should be uploaded on Nepra website for stakeholders’ comments and a due process should be followed and public hearings should be scheduled.
“We all agree the country is suffering an energy crisis with regionally lowest per capita power consumption. Approximately 50-60m people having no access to electricity across Pakistan. Authority is requested to ensure merits, transparency and judicious decision making while approving IGCEP 21-2030 to realise dream of affordable, secure and sustainable electricity to the consumers of the Pakistan,” he urged.
Published in Dawn, September 20th, 2021