Projects ‘ineligible’ under IGCEP: PD not ready to lend a helping hand to Korean firms

ISLAMABAD: The Power Division is reportedly not ready to extend any helping hand to Korean companies which have invested millions of dollars on the development of hydel power projects in Khyber Pakhtunkhwa (KPK).

The representatives of Korean companies are neither being given time for a meeting by the concerned officials nor are their projects getting approval as they are ineligible under Indicative Generation Capacity Expansion Plan (IGCEP).

In a letter to Secretary Power, Chief Executive Officer, LSG Hydro Power Limited, Wan-Seok Bae (which is developing 470MW Hydropower Project in collaboration with the Government of Khyber Pakhtunkhwa under the Public Private Partnership since 2018) acknowledged that the project was not optimized in the IGCEP and as a result the project ’s progression has been halted.

KOEN demands tariffs for its hydel projects under 2015 Policy

The introduction of new market regulations, requiring projects to be optimized in the IGCEP, has created challenges for foreign investment.

LSG HPL, a subsidiary of Korea Hydro & Nuclear Power Co., Ltd. (KHNP), has made significant progress fulfilling key obligations outlined in the Letter of Intent (Lol). In 2022, LSG HPL completed a bankable feasibility study.

The project successfully obtained several NOCs from relevant authorities, including the EPA, Forest Department and IRSA. However, despite these advancements, the project encountered a setback when the feasibility study tariff petition and the application for a generation licence were returned.

“Despite these regulatory hurdles, the project remains governed by the terms of the LoI and the Power Policy 2015, which were approved by the Council of Common Interest (CCI) prior to the introduction of the new regulations,” CEO said, seeking appointment from the Secretary Power for his support, however, he has not been given any appointment so far.

Chairman Senate Standing Committee on Power, Senator Mohsin Aziz urged Nepra to consider two hydel power projects, which are facing similar circumstances.

Korean company KOEN (Korea-South East Power Company, Ltd) which wrote a letter to the Chairman Standing Committee to seek his support as he is a PTI Senator hailing from KPK, called on National Electric Power Regulatory Authority (Nepra) to set tariffs for its hydel projects under the Power Policy 2015. KOEN emphasised that the Government of Pakistan (GoP) and its regulatory bodies must uphold the integrity of their policies.

However, Minister for Power Sardar Awais Leghari and Nepra Chairman, Chaudhry Waseem Mukhtar at a recent meeting argued that the government is not looking to add new projects to the IGCEP as the next decade’s projects are already allocated. They suggested that Korean projects could be considered in the future if they align with the least cost methodology of the revised IGCEP, which is currently under review.

KOEN, in its letter, acknowledged that the projects in the IGCEP are viable and contribute to energy security and economic stability but Nepra’s cost comparison criteria are flawed.

KOEN has urged the government and its regulatory bodies to maintain policy integrity, ensure fair treatment for all investors, and foster a consistent investment environment. The company requested Nepra to determine the tariffs based on the Power Generation Policy 2015 and revise the IGCEP methodology for future projects to ensure fair cost criteria and policy certainty for foreign investors.

Copyright Business Recorder, 2024