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ISLAMABAD: Saudi Arabia is revisiting the committed amount of deferred oil facility of $3.2 billion annually keeping in mind the Pakistan's capacity of utilisation of the facility, Special Assistant to Prime Minister (SAPM) on Petroleum Nadeem Babar said at a joint press conference here on Wednesday.

He said the federal government has requested the government of Saudi Arabia for the continuation of deferred oil facility of $3.2 billion on the expiry of facility on May 2020.

Responding to a question, he said the government has asked for deferred oil facility as per three years agreement, however, the government did not know when the oil deferred payment would continue.

"We don't know when the Saudi Arabia will inform us about the amount of deferred payment," he said.

He further said the decision on the deferred payment would be taken on the basis of utilisation of facility in last one year.

In May 2019, Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh had announced through his Twitter handle that "from July 1, 2019 KSA is activating the deferred payment for petroleum products facility of $275 million per month amounting to $3.2 billion per year for three years".

The advisor was talking at a joint press conference along with Federal Minister for Power and Petroleum Omar Ayub, Minister for Science and Technology Fawad Chaudhry, Secretary Power Umar Rasool, and SAPM (Power) Shahzad Qasim here.

The Government of Pakistan Tehreek-e-Insaf (PTI) has set a target to increase the share of renewable energy in total energy mix by 20 percent by 2025, and 30 percent by 2030, which will help bring down the cost of electricity by 20 to 25 percent. The press conference highlighted salient features of a new Alternative and Renewable Energy Policy (ARE Policy 2019) approved in recently held Council of Common Interests (CCI) meeting.

Babar said the government was anticipating to bring down the tariff of solar and wind energy by three cent through a transparent competitive bidding, which was around four to 4.5 cent at present.

He said the government exempted customs duty, import duty and income tax on equipment to be used in alternate energy products; however, withholding tax would be payable.

He said the average cost basket of electricity would also reduce significantly. "The consumer will not pay capacity charges as we will pay only the cost of unit," he added.

He said the locations of grid would be decided in consultation with four provinces, the Azad Jammu and Kashmir and Gilgit-Baltistan. A steering committee was established under Alternate Energy Board for distribution of alternate energy, based on their alternate energy potential.

He said the exchange rate had also been included in the policy for the first time.

He said the devolution or dollar index rate would also be included in the bidding.

He said the exchange rate movement was a major factor in the rise of electricity cost in the last five years.

He said each year auction would be held keeping in view the demand of electricity.

"Three mega Chinese companies and one European company have committed to establishing manufacturing units of wind and solar panels in Pakistan," he added.

Omar Ayub said that around 75 percent electricity would be generated through indigenous sources of energy including solar, wind, coal, nuclear, bio etc under the PTI's Vision 2030.

He said the policy also addressed transfer of technology to alternate energy and employment would be generated by local production of solar panels, wind blades and other equipment as well as help to bring the cost of electricity at affordable level. Fawad Chaudhry said the government had set a target of increasing the share of 20 percent alternate energy mix in the total energy pool.

This policy would provide a space for Chinese companies, which wanted to relocate amid a trade war between China and the USA. "Chinese companies have an opportunity to set up manufacturing units under the umbrella of the CPEC," he said.

Local governments and municipal corporations could also produce their electricity under the alternate policy, he maintained.

He said that previous governments had fully reliance on imported fuel for the generation of electricity, which increased the generation cost.

The circular debt in gas reached Rs175 billion and people received heavy electricity bills.

The AEDB, on the directions of the Power Division, has formulated a new Alternative and Renewable Energy Policy (ARE Policy 2019) consequent to expiry of RE Policy 2006 in March, 2018.

The policy has been prepared in consultation with all relevant public and private sector stakeholders, including provincial governments.

The ARE Policy 2019 was approved, in principle, by the CCI in December, 2019 subject to incorporation of observations of provincial governments.

After detailed deliberations with the provincial governments, the ARE Policy 2020 incorporating the observations of provincial governments, has been approved by the CCI on 5th August, 2020.

The salient features of the ARE Policy 2020 are as follows: The policy has an expanded scope encompassing all alternative and renewable energy sources, competitive procurement and addresses areas like distributed generation systems, off-grid solutions, B2B methodologies and rural energy services; The ARE Policy 2020 is target-oriented and sets a target of achieving 20 percent on-grid capacity from ARE technologies by 2025 and 30 percent capacity by 2030; the ARE Policy 2020 envisages development of large-scale ARE projects in all parts of the country through active participation of the provinces; Indicative Generation Capacity Expansion Plan (IGCEP) outputs will form the basis of all on-grid capacity procurements; provinces are part of the Steering Committee envisaged in the policy that will be carrying out the planning of annual ARE induction. Provincial energy departments will be carrying out competitive bidding processes as per the annual ARE procurement plan approved by the AEDB Board on recommendations of the Steering Committee; the most significant feature of the policy is that it makes a transition from the traditional methods of procurement based on cost plus and upfront tariffs to competitive bidding. All new ARE projects specifically wind and solar power projects will be developed through competitive bidding; promotion of local manufacturing through active coordination between concerned public sector stakeholders; the policy envisages simplification and rationalization of the licensing framework for non-utility procurement to minimize regulatory fee, compliance costs and timeframes; and, the policy envisages development of ARE projects on the basis of outcomes of Indicative Generation Capacity Expansion Plan (IGCEP). The NTDC has recently prepared the draft IGCEP 2047 and has submitted the same to the Nepra for approval. The draft IGCEP considers the targets set in the policy for increasing share of ARE i.e. 20 percent by 2025 and 30 percent by 2030.

Copyright Business Recorder, 2020

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