ISLAMABAD, Feb 6: The Private Power and Infrastructure Board (PPIB) has sought approval from the government to reject investment proposals worth more than $2 billion in the power sector because of procedural difficulties and gas shortfalls, Dawn has learnt.

An official said that the proposals for investment in 900-mw gas-based projects and about 1,100-mw of hydel- and coal-based projects would be rejected and processing fee returned to the investors this month.

Out of these, the government had itself invited about $1 billion investment while investors had submitted their requests for over $1 billion investment through unsolicited proposals. The PPIB is expected to be given a formal go ahead to return these proposals at a meeting this month.

The decision comes when the country is facing a power shortfall of about 1,500-mw.

The PPIB had decided in the last week of December 2004 that in future it would award projects only on competitive basis wherever pipeline quality gas was available or a feasibility study of the project had already been done. The decision covered oil or dual fuel projects also.

The board had also decided that for raw hydel and coal site projects, expressions of interest will be invited through advertisements in the press, and letter of intent (LOI) for feasibility study issued to the best proposal. For this purpose the PPIB would prepare a criterion for evaluation of the proposals.

A new situation emerged due to these decisions because the PPIB had already received raw site proposals under various categories.

Till the cut-off date of December 23, 2004, the PPIB had received five unsolicited raw site hydel and coal projects involving a total power generation capacity of about 1,100-mw at a cost of $1.1 billion.

The PPIB told the government that it had not yet processed these proposals and wanted to return them along with a $2,500 processing fee. Moreover, under an advice from the Ministry of Water and Power, the PPIB had solicited proposals for a 300-mw power project at Gadani and a 600-mw one at Hawkes Bay.

The Ministry of Petroleum and Natural Resources, however, had categorically declared that gas would not be made available to the Hawkes Bay and Gadani projects.

"As there appears to be no chance of these projects materializing, the PPIB wants to return the proposals to the sponsors along with an $18,700 processing fee received from them."

The government had estimated that the KESC faced a shortfall of about 600-mw of power which was expected to rise to about 1,300-mw by the year 2010.

Wapda had also informed the government about shortage to the tune of 1,000-mw by next year in its system, hence taking the total shortage in Wapda and KESC systems to over 1,500-mw, the officials said.

Notwithstanding these rejections, the government has decided to develop a 200-mw barge-mounted, gas-based project near Bin Qasim.

The PPIB has so far received around $4 billion worth of two-dozen unsolicited proposals for gas-based power plants throughout the country with a total capacity of 3,548-mw.

"In view of projected gas shortfalls, all these projects, except one or two, have no future at least in the given circumstances and would have to be rejected," said a senior government official.