ISLAMABAD, Oct 22: The Economic Coordination Committee of the Cabinet (ECC) here on Tuesday approved power generation policy, 2002, to offset shortage of around 400-500mw by 2005.

The ECC meeting, which was presided over by Finance Minister Shaukat Aziz, believed that the new power generation policy would encourage and promote investment in the private power generation.

The policy envisages one-window operation to facilitate the investors. The objectives of the policy are to provide sufficient capacity for power generation at a minimum cost and to avoid capacity shortfalls; encourage and ensure exploitation of indigenous resources, including renewable energy resources, human resources, participation of local engineering and manufacturing capabilities; create a win-win situation for all stakeholders; and attune it to safeguarding the environment.

The thrust of the policy is on promoting hydel power projects, coal and gas-based projects and reducing dependence on expensive furnace oil.

The scope of the policy covers private and public sectors’ projects, public-private partnership and the projects developed by the public sector and than divested.

Under the policy, provinces will manage investments for up to 20mw power stations. However, for the projects above 20mw, the provinces would be the main drivers and catalysts for marketing and coordinating projects with the Private Power and Infrastructure Board (PPIB). The projects approved under the previous policy will be governed by the terms and conditions stipulated therein.

According to an official announcement, the new policy provides no levy of sales tax on such plant, machinery and equipment as the same will be used in the production of taxable electricity and exemption from income tax, including turnover tax and withholding tax on imports. However, there will be no exemption of income tax on oil-fired power projects.