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KARACHI: Sindh Energy Department has alleged that the federation is trying to generate expensive electricity, which could lead to huge losses to the exchequer in future.

Sending a letter to the Federal Minister for Energy and Chairman NEPRA, Provincial Minister for Energy Imtiaz Ahmed Sheikh said that the proposed coal-fired power projects in Sindh were not included in the Indicative Generation Capacity Expansion Plan – known as (IGCEP) 2021-30, which cost billions of rupees.

He wrote that in the 47th meeting of Council of Common Interests (CCI) held on June 21, 2021 it was observed that the provinces were not consulted by ministry of energy (power division) cabinet committee on energy, while finalizing the computations of IGCEP.

He wrote that the federal ministry of energy power division had not taken into account the comments and concerns of Sindh province, For instance, the local coal and renewable project initiated by government of Sindh which actually comply with competitive and least cost principles are not considered for the revised IGCEP. Instead, relatively higher cost projects have been picked as committed projects.

Shaikh wrote in his letter to the Ministry of Energy and Nepra that five out of 10 projects with a capacity of 5,093 MW have been included in the IGCEP, and according to Nepra, the lowest level tariff for hydro projects is about Rs. 7 US cents per kWh, while Nepra had tariffed 5 wind power IPPs with a total capacity of 275 MW under the ARE policy before the formal notification, The average surface tariff for these projects was about 3.40 cents per kilowatt.

And in the IGCEP, these projects of wind power IPPs were not considered on the pretext that they have been placed in Category 3 by the Cabinet Committee on Energy, while the hydropower projects prioritized over low cost wind projects by reasoning that the cost of production would increase, but the potential impact would be about 30 million a year and the life cycle impact of these projects would cost about USD 875 million.

He wrote that in the 47th meeting of Council of common interest held on June 21, 2021 it was observed that the provinces were not consulted by ministry of energy (power division) cabinet committee on energy, while finalizing the computations of IGCEP.

He wrote in his letter that IGCEP estimates the standard that projects, whose PC-1 is approved in March 2021 and funding is secured, will be considered as committed projects. However, the Sindh Solar Energy Project with a capacity of 400 MW, funded by a World Bank in Sindh Province, approved by ECNEC, was completely ignored and not included in the IGCEP, which means that only 50 MW was allegedly considered and 350 MW was ignored.

He said in his letter that the non-inclusion of 3.5 cents per kilowatt solar power projects in hydro projects will increase the overall production cost, with the expected potential impact of about USD 21 million annually, while the cost on the lifetime cycle will come 525 million.

Sheikh further wrote in his letter that Messrs. Oracle which manufactures 7.8 MPTA mine in Block 4 of Thar Coal Project. It will provide USD 36 per tonne of coal in 15 years and USD 37 per tonne in the next 15 years, with this price of coal, the Government of Sindh will generate electricity by setting up a 1320 MW power plant at a rating recommended by Block 4 sponsors.

The 5.45 US cents per kilowatt coal project is not included in the IGCEP, which will increase the production cost, costing about USD 160 million annually and USD 4.8 billion on the lifetime cycle.

Copyright Business Recorder, 2021

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