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ISLAMABAD: Private sector investors have advised the government to extend the deadline for bidding of 600 MWp PV solar power projects at Kot Addu (Muzaffargarh), two months after General Elections 2024 as this time Development Financial Institutions (DFIs) are holding back on the clean energy project due to uncertainty and lower credit rating of Pakistan.

This suggestion was floated by M/s Atlas Power, Gul Ahmed Energy Group, and Metro Power Group of Companies in separate letters to the caretaker Minister for Power and Petroleum, Muhammad Ali.

The Government of Pakistan (GoP) through the Private Power and Infrastructure Board (PPIB), invited International Competitive Bidding (ICB) to submit a levelled tariff for 25 years on a BOOT (Build, Operate, Own and Transfer) basis in April 2023. Twelve parties purchased the bidding documents but no party submitted the bid due to its benchmark tariff, hence the GoP abandoned the process.

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The government relaunched the project after removing the tariff-related problems, and this time, eleven parties purchased the document for submitting the bid.

This time, DFI development financial institutions like IFC, BII, ADB, FMO etc. indicated no interest in financing this project due to lower credit rating of the country and uncertainty.

“Second time failure will be a big blow to achieving the cheap and clean energy target. Considering the current situation, we request PPIB to extend the closing date of bidding two months beyond the general elections,” said Maqsood Ahmad Basra in his letter to caretaker Minister for Energy, Muhammad Ali.

M/s Atlas wrote with reference to PPIB’s Request for Proposal Document (RFP) pertaining to the 600MW solar project at Kot Addu/ Muzaffargarh, Punjab, Pakistan, wherein the stipulated deadline for the submission of Bidding Documents by interested Bidders was December 11, 2023.

Atlas Power requested the MoE (Power Division), and PPIB, to consider extending the deadline for the submission of bids to a suitable time after the general elections in the country are held on Feb 08, 2024.

The PPIB however recently issued a corrigendum stating that it invited bids/proposals from the private sector investors for development of the project on BOOT basis through advertisement on September 10, 2023.

According to the corrigendum, the deadline for submission of bids/proposals has been extended up to January 11, 2024. All other terms and conditions will remain the same.

Gul Ahmed Energy Group and Metro Power Group of Companies highlighted to the Authorities that bid deadline after the February 2024 general elections is more suitable as the current risk profile for the interested lenders’ syndicates is too high with Pakistan’s sovereign credit rating designated at CCC (Fitch Rating). Resultantly, the financing available for a large-scale RE project is expensive for the project sponsors and developers, which reduces the bidders’ competitiveness, and any ultimate cost savings for national consumers are not achievable.

They further contended that during the roadshow for the 600MW Project, and during project briefings and pre-bid meeting, MoE (Power Division) and PPIB were advised to provide clarity and focus on the RFP for private transmission projects such as 500 kV line from Jhimpir to Matiari, along-with the overall transmission framework, infrastructure and upcoming projects, as various stakeholders of the renewable sector have raised serious concerns on the inadequacy of the current transmission set-up to fully evacuate the affordable power from the installed RE projects, leading to continuous curtailments and loss of returns and confidence for project sponsors and multilateral DFIs/investors providing debt and equity financing for RE projects.

It is of critical importance that all transmission bottlenecks are tackled first, to resolve curtailment losses faced by renewable projects and to boost investor confidence to attract further foreign direct investment in future renewable generation projects.

Moreover, the economic and political stability stemming from general elections is crucial to attract the required foreign funding for the 600MW solar project at affordable and competitive rates of international financing to submit competitive bids to pass on the benefit of affordable renewable energy to the people of Pakistan.

Copyright Business Recorder, 2023

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