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ISLAMABAD: The government’s flagship project of 600-MW solar plant at Muzaffargarh (South Punjab) is reportedly in jeopardy as Planning Commission (PC) has refused to extend funding due to resources constraint during the current fiscal year, well informed sources told Business Recorder.

Planning Commission, sources said, has conveyed its inability to arrange funds in response to Ministry of Energy (Power Division) O.M of March 4, 2023.

Majid Hussain Memon, Assistant Chief, in a letter, duly approved by the Secretary Ministry of Planning, Development and Special Initiatives has informed Power Division that due to non-availability of savings at this stage under Public Sector Development Plan (2022-23), it is not feasible to provide additional funds of Rs 3.958 billion as Cash Development Loan (CDL) to Power Division for two unbudgeted projects approved by the Central Development Working Party (CDWP) on October 28, 2022 titled, land acquisition for installation of 600 MW solar power plant at district Muzaffargarh, (Rs 1.4 billion ) and land acquisition for installation of 600 MW solar power plant at Tehsil Athara, district Jhang (Rs 2.558 billion).

600MW solar plant: Nepra meeting witnesses heated debate on RFP

According to sources, Ministry of Planning, Development and Special Initiatives advised Power Division to explore possible savings within its budgeted portfolio and meet the minimum pressing demand of these projects through re-appropriation during CFY.

Ministry of Planning, Development and Special Initiatives has also proposed that in case savings are not available within the budgeted portfolio, Power Division may approach Finance Division for provision of requisite funds as CDL through Supplementary Grant for both projects, over and above the size of PSDP 2022-23.

In September last year, the government had unveiled its policy on fast-track development of solar PV projects at an investors’ conference to offer projects of 600 MW.

The salient features of the policy are: (i) single stage, two-envelope bidding; (ii) straight line tariff; (iii) 70 percent indexation of tariff; (iv) benchmark tariff by Nepra; (v) guaranteed purchase of power; (vi) land and interconnection to be provided by GoP; (vii) exemption on all import related duties and taxes; (viii) existing EPA & IA will be used; (ix) Commercial Operation Date (COD) within 12 months of Energy Purchase Agreement (EPA); (x) term-25 years on BOOT basis; (xi) 11.15 percent income tax; and (xii) payment guaranteed on 60th day after invoice through bank default.

Security documents are included in GoP Implementation Agreement (IA), principal concession agreement, and backstops of all contractual obligations of public sector entities covers all fiscal and financial incentives, force majeure and change on law protections, etc.

The sources said, several domestic and international parties including, United Arab Emirates, Qatar, Saudi Arabia and China have show interest in solar projects. Last month, Pakistan organized a road show in UAE to attract investment in solar projects.

Alternative Energy Development Board (AEDB), sources said, was also facing issues in purchase of land in Muzaffargarh after location of project was shifted.

Copyright Business Recorder, 2023


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Salman Nazir Apr 03, 2023 09:15am
The government's decision to start a 600 MW solar project is absolutely strange given that there are many projects with approved feasibility studies available. There are five such projects in the KP with a cumulative capacity of 250 MW, approximately 400 MW projects in Sindh, 100 MW in Baluchistan, and a 400 MW project in Punjab. With such a potential for approved projects available, introducing 600 MW all of a sudden is a waste of resources and discourages the open market and potential investors from Pakistan who have engage their resources on developing the projects. The government still needs to think that instead of executing one project at one place, they should open the market by organizing bidding on priority for all existing solar projects those feasibilities are approved. This will support the delocalized generation which will, in turn, support the grid and the sustainable development of solar through an open market approach.
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Kashif ALI Apr 03, 2023 09:37am
@Mushtaq Ghumman, I am sure that there is a wide difference between "Jeopardy" and "Deferment". From the details of your reporting, it is evident that the project seems to be deferred till next fiscal year. This delay owes itself to shortage of funds. "Jeopardy" refers to possibility of something that will be eventually wound up, scrapped, or done away with. I hope the right word would be used in future reporting. Thanks
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John Apr 03, 2023 09:48am
An other mega corruption project doomed for failure!
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Abdullah Apr 03, 2023 10:04am
@Kashif ALI, they would use it only if they dint worry about rarings.
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Muhammed Apr 03, 2023 12:07pm
Put complete ban on the so-called PSDP, always a source of mega corruption for all & sundry, & use whatever available amount to clear standing liabilities & debts which are multiplying with every passing day because of super hike in interest rates.
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Saim Apr 03, 2023 04:47pm
@Salman Nazir, The government wants to give DISCOS back to provinces for tax collection. On the other hand, the provincial governments demand the ownership of generated electricity in their provinces. So, the provinces have to be self sufficient or engage with federal and provincial governments. This project is a renewable energy and also a step to self sufficieny for provinces.
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Aamir Latif Apr 03, 2023 07:39pm
Though good project, but financial constraints should be overstretched to make it election flagship for publicity.. Country should stop mega developmental projects and focus on revival of economy and current running businesses stability
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TimeToMovveOn Apr 03, 2023 11:00pm
"The sources said, several domestic and international parties including, United Arab Emirates, Qatar, Saudi Arabia and China have show interest in solar projects. " Only the sources say this, none of the countries affirm it. It is basically Pakistna saying hey will invest, they will invest, someone will invest. Just like CPEC, all noise no products.
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