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ISLAMABAD: The Ministry of Foreign Affairs (MoFA) has requested Power Division to extend all possible facilitation to Norwegian power firm for completion of its solar project in Sindh, sources told Business Recorder.

Minister of State (MoS) for Foreign Affairs Hina Rabbani Khar met CEO of Scatec solar during her recent visit to Oslo on June 5-6, 2023. During the meeting, CEO Scatec conveyed that the company needs certain exemptions/extensions for successful completion of the project.

CEO Scatec had earlier sent a similar letter addressed to Chief Minister Sindh. Scatec solar is the second major investment from Norway to Pakistan and would contribute to meeting our energy needs. Moreover, to give a positive signal to other foreign investments from Norway, it is critical that the project commences smoothly.

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The MoFA has requested Power Division that Scatec’s operations may be extended all possible facilitation, including security support.

The Norwegian power firm, in its letter to MoS Foreign Affairs said that Scatec ASA and Nizam Energy have since 2014 jointly developed 150 MW (3 x 50MW) solar power projects in Sukkur. Scatec ASA is a leading renewable power producer, delivering affordable and clean energy worldwide.

Scatec is based in Oslo, Norway and listed on the Oslo Stock Exchange. Scatec will hold 75% of the equity, with Nizam Energy holding the remaining 25% in the projects Helios Power Limited, HNDS Energy Limited and Meridian Energy Limited-collectively called the “projects”. FMO- the Dutch Development Bank, Faysal Bank, Bank of Punjab and PAK Kuwait Investment have signed credit agreements for the non-recourse debt financing of the projects.

The banks have so far not been willing to disburse any money under these credit agreements due to the uncertain situation surrounding the project and the construction of the project is solely so far funded by Scatec equity.

The projects are close to completion, despite all the challenges the sponsors have faced including land demarcation, flooding and community issues, and foreign exchange and import restrictions.

M/s Scatec maintains that it is facing considerable challenges which need support from MoFA. There are few exemptions that are required from Government of Sindh which include permission of Government of Sindh to connect plant to earth under Electricity Act, exemption by Government of Sindh of application of Section 30 of Electricity Act and certificate of stability by Government of Sindh under Factories Act, certificate of registration by Government of Sindh under Factories Act.

The project has faced another force majeure event in the shape of severe windstorm, which has caused damage to the equipment. Scatec is procuring the new equipment mainly from suppliers in China, which will take time and will unfortunately cause further delay in the completion of the project.

The company has sought support from different entities of Government of Pakistan in this regard including permission to import new equipment by State Bank of Pakistan etc.

Scatec’s Asset Ownership/Investment Manager approached the Embassy stating that the windstorm in the solar plant area in Pakistan on April 18 2023 had incurred a damage of around $ 4-5 million.

The company has directly sent a formal request to the Pakistani authorities for grant of further extension up to 4-6 weeks. In addition, due to damage the company wants to import equipment to Pakistan, which will dock likely in August this year.

Copyright Business Recorder, 2023


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Mohammad Anwar Jun 25, 2023 12:53pm
Ministry of power division and finance ministery as well as state bank should remove all hurdles in solarization of Pakistan.
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