ISLAMABAD: K-Electric (KE) has expressed willingness to become partner in 3,000-MW Renewable Energy (RE) project of Saudi company M/s ACWA, which requires Government to Government (G2G) arrangement between Pakistan and Saudi Arabia.
In response to a letter of Power Division of August 24, 2023, wherein the KE has been requested to provide its views with regard to the Expression of Interest (EoI) submitted by ACWA Power for the development of up to 3,000MW of Renewable Energy (RE) project, Chief Executive Officer KE, Syed Moonis Abdullah Alvi, stated that the intent to work as a power off-taker, and strategic partner with ACWA, to carry out the development of this project has already been provided through its letter of July 12, 2023.
According to the CEO, KE will provide a robust and bankable payment security to the Project Company through its Power Purchase Agreement (PPA); accordingly, relieving the Government of Pakistan (GoP) from covering the risk of ensuring timely payments.
Furthermore, KE will also lead the process of local development works, helping the foreign entity to navigate the roadblocks that might be faced during the engagement with local stakeholders.
KE currently envisages inducting approximately 800-1,000 MW of solar electricity over the next few years out of which the power utility company has already initiated the transition towards induction of large scale RE projects via competitive bidding into its energy mix.
KE has filed the requisite Request for Procurement (RFP) documents with the power regulator, approvals of which are still awaited. These RFP documents, once approved, will enable the initiation of procurement process for 600MW of RE capacity addition into the power mix of KE.
CEO further stated that KE is in the process of ascertaining the maximum renewable capacity that can be inducted into its system beyond its current capabilities, while maintaining system reliability and cost optimization. This is being performed with the help of world-renowned consultants.
“Based on the results of this study, KE would plan the necessary, practical, and economic augmentations where required, to maximize intake of low-cost renewable energy. The capacity mentioned in the ACWA proposal is; hence, set to come in a phase wise approach,” he said adding that KE believes that the recently constituted Special Investment Facilitation Council (SIFC), a most viable forum, can help ensure the success of this initiative.
Accordingly, it is suggested that this Project should be made part of the list of power sector projects that are included in the SIFC. KE has also proposed that the Project requires a Government to Government (G2G) arrangement to be agreed between the Government of Kingdom of Saudi Arabia and Government of Pakistan, and the process of entering into this arrangement may be expedited.
“With the requisite patronage of SIFC, and the finalization of G2G arrangement amongst the two governments, this opportunity should be categorized as a project of strategic nature, enabling it to benefit from the relevant provisions present in the prevailing policies and regulations therefore, facilitating the completion of swift procurement and tariff acquisition processes,” Alvi wrote in the letter.
KE further argued that due to the impressive and unparalleled track record of ACWA Power for providing inexpensive tariffs all around the globe, coupled with short gestation period of RE development, and with timely support extended by the GoP, this Project has a potential to become the catalyst in reducing the generation cost of KE at a breakneck pace. Consequently, providing much needed relief to the GoP, through the reduction in the annual subsidy and as a result, creating the necessary fiscal space for carrying out similar initiatives.
“We remain available to work out the technical, commercial, and legal modalities of the Project, with the relevant representatives of Power Division and the Private Power &Infrastructure Board (PPIB),” Alvi concluded.
Copyright Business Recorder, 2023