The federal government is unlikely to purchase power from imported fuel-fired projects which fail to achieve financial close as per the schedules agreed with the Private Power & Infrastructure Board (PPIB), well-informed sources told Business Recorder.
The federal government’s decision has put the fate of several imported-fuel power projects at risk being processed by the Punjab government without taking the Ministry of Water and Power into board as this policy is not feasible for the country in the long run, sources added.
PPIB Board headed by Minister for Water and Power, Khawaja Asif in its 105th meeting had decided to ban new imported fuel projects but the PPIB’s top boss continued to ” misguide” the investors.
However, Secretary Water and Power, Younus Dagha took serious notice of the situation and directed the PPIB to convey the decision of the Board to the investors and sponsors in clear words.
According to sources, PPIB top brass is still looking some room to “accommodate” imported fuel projects and for this purpose, this issue was again raised in 106th board meeting held recently in the Ministry of Water and Power.
Official documents available with this scribe prove that Managing Director PPIB, Shah Jahan Mirza sought guidance on the observations conveyed by the Secretary Water and Power regarding decision of the Board on “capping proposal for various generation options” and informed that the decisions as listed in the minutes of the 105th meeting may be reviewed and any changes, if deemed necessary, may be advised by the Board.
Minister for Water and Power, Khawaja Asif, who is also the chairman of the board, was of the view that power generation based on imported fuel cannot be left unwatched as it entails considerable amount of foreign exchange on importing fuel.
Accordingly, a reasonable measure for capping such power generation based on imported fuel should be in place in order to provide local economical sources of power for the country in the long run.
Secretary Water and Power, Younus Dagha apprised that the board has already approved made in the presentation during 105th meeting and accordingly, PPIB should not entertain and process projects based on imported fuel.
Moreover, since the Board has agreed to grant 12 months extension in term of Letter of Support (LoS) for both the Lucky Electric and Siddiqsons power projects on the condition of converting their proposals on local coal, the sponsors of these projects should utilise local coal instead of imported for their projects.
It was informed that the Board decision has already been conveyed to the sponsors of both projects, however, they have shown their inability to convert to local coal at this advanced stage of the project development.
Secretary Water and Power remarked that both the companies may be convinced for converting their projects to local coal otherwise the extension may not be granted.
He further remarked that if the proposed the two projects are converted on local coal, Pakistan will save considerable amount of foreign exchange and this is the right time to implement such strategy as the country will have surplus power in 2019 when these plants were proposed to achieve Commercial Operation Date (CoD).
Representatives of PPDB/ Energy Department Punjab raised concerns on capping the electricity generation through imported fuel and informed that the GoPunjab is already processing various power generation projects based on imported coal, which would subsequently be forwarded to PPIB for further processing under tripartite LoS.
Secretary Water and Power clarified that no such formal approval/ intimation has been presented to the Ministry/ PPIB for any such imported fuel based projects being processed/ initiated by the Govt of Punjab and as such Government of Pakistan cannot allow projects which offer a costlier and imported fuel based solution to the nation.
“Since power has to be purchased by the federal government, the relevant province should inform and co-ordinate with the Centre in relation to any such power project, so that informed decision based on demand supply-situation could be made,” Secretary Water and Power added.
The Board discussed the matter at length during its 106th meeting and approved the draft minutes of 105th meeting accommodating the observations of Secretary Water and Power.
Further, it was concluded that meetings with the sponsors may be initiated to inform then that after the delay in achieving the financial close of the projects, it would not be more feasible to the federal government to purchase power from plant based on imported fuel when there will already be a surplus of power generation in 2019. -Business Recorder