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ISLAMABAD: President Dr Arif Alvi has approved an amount of Rs 930 million as Cash Development Loan (CDL) to acquire land for the solar power plant at Muzaffargarh after both Planning Division and Power Division showed reluctance to re-appropriate existing PSDP funds, well-informed sources in Finance Division told Business Recorder.

The land acquisition, sources said, will be executed by the NTDC during current quarter, i.e., fourth quarter (April-June) of 2022-23.

The terms and condition of the loan are as follows: the loan will be recoverable in 20 years along with interest with a grace period of five years for recovery of principal amount. The interest will be chargeable at the prevailing rate for the respective year.”

Muzaffargarh solar plant land: Power Div asked to raise Rs930m from its own unutilised funds

The amount will be credited to the Project’s Assignment Account No.1200, maintained in National Bank of Pakistan, Main branch, Lahore, in accordance with the orders regulating the operation and maintenance of the assignment account.

The expenditure involved is debitable to the functional-cum-object classification, which will be met from re-appropriation budget of the Finance Division during FY 2022-23.

The Prime Minister Office (PMO) had asked the Ministry of Planning, Development and Special Initiatives (PD&SI) to make Rs 930 million available through re-appropriation for land acquisition in connection with the planned 600-MW solar power plant at Muzaffargarh.

Sarah Saeed, Special Secretary to Prime Minister, in a letter to Secretary Planning, Development and Special Initiatives, stated that Prime Minister has desired that the ministry may provide funds to the tune of Rs.930 million through re-appropriation for land acquisition in connection with the planned 600-MW solar power plant at Muzaffargarh, in view of the justification elaborated by Power Division.

The PMO also asked Planning Ministry to consult Power Division for financial phasing, if possible. A report may also be submitted for the perusal of the Prime Minister.

Power Division, in its summary to the Prime Minister argued that to mitigate the impact of ever-increasing energy cost, government took the initiative for installation of utility scale solar power plants with total envisaged capacity of 2400-MW.

This initiative was based on the concept of substitution for which three sites near the existing plants at Muzaffargarh, Trimmu and Layyah were identified. PC-1s for the acquisition of land measuring 2400 acres at Muzaffargarh, 2400 acres at Trimmu and 4800 acres at Layyah were approved in October 2022 at a total cost of around Rs 6.616 billion and land acquisition process was initiated with the assistance of local administration.

In this regard, Muzaffargarh project was taken as first priority and fast track process was followed to complete the land acquisition process as land was to be handed over to the successful bidder. Initial estimated cost for acquisition of land at Muzaffargarh was around Rs.1.4 billion.

However, district administration of Muzaffargarh and Kot Addu completed the section 4 and subsequent price assessment exercise at much less cost of Rs 930 million.

For the completion of next steps, Power Division has been requesting Ministry of Planning, Development and Special Initiatives for release of requisite funds. After completing required formalities, first request for release of funds was made on January 27, 2023 and the last reference was sent on March 4, 2023.

However, no funds have been released so far. As a result, the process of section 5 and other related steps has been put on hold. Bidding for 600-MW solar power plant at Muzaffargarh is well under way and bid submission date is fixed for May 8, 2023.

Power Division maintained that given the situation it seemed that if land acquisition process was not completed before this date because of non-availability of funds, project completion schedule shall also be adversely affected.

The sources further stated that the government has presented these solar substitution projects as flagship initiative to IMF and other donors for bringing generation cost down to give relief to poor strata of society.

Power Division, in its note to Secretary Prime Minister requested that both Ministry of Planning and Ministry of Finance be requested to at least release the funds for acquisition of land for Muzaffargarh project amounting to Rs 930 million as per land assessment report.

Earlier, Ministry of Planning, Development and Special Initiatives, in its communication had 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).

Ministry of Planning, Development and Special Initiatives had 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 had 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.

Copyright Business Recorder, 2023

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