Proposed 600 MW projects: Government unveils policy on solar PV projects
ISLAMABAD: The government on Wednesday unveiled its policy of accelerated development of solar photovoltaic projects at an investor conference to propose 600 MW projects.
The main features of the policy are: (i) single-stage, two-envelope bidding; (ii) linear tariff; (iii) indexation of 70% of the tariff; (iv) reference tariff by Nepra; (v) electricity purchase guarantee; (vi) land and interconnection to be provided by the GoP; (vii) exemption from all import duties and taxes; (viii) existing EPAs and IAs will be used; (ix) Commercial Operation Date (COD) within 12 months of Power Purchase Agreement (EPA); (x) term of 25 years on a BOOT basis; (xi) income tax of 11.15%; and (xii) guaranteed payment on the 60th day after invoicing by bank default.
Security documents are included in the GoP Implementation Agreement (IA), Master Concession Agreement and backstops of all public sector entity contractual obligations cover all fiscal and financial incentives, force majeure and modification of legal protections, etc.
The power purchase agreement is the essential business document that defines the terms and conditions of the sale and purchase of electric power between the seller and the buyer, including testing and commissioning, the mechanism of payment, delays and default clauses, dispute resolution, etc.
Former Prime Minister Shahid Khaqan Abbasi, Chairman of the Prime Minister’s Task Force on Solar Energy Initiatives, Energy Minister Khurram Dastgir Khan and Energy Secretary Rashid Mahmood Langrial and others addressed the conference and shared details of solar initiatives.
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Shahid Khaqan Abbasi, in his address, said Pakistan’s power sector was suffering substantial losses and the government was trying to address this issue. He said the government will provide the land, the interconnection and buy all the kilowatt hours to be produced by the companies, adding that the payments will be made within 60 days. He hoped that there would be no disputes over the issues to be raised and that it would not be part of the circular debt but rather help solve the problem of the circular debt.
“We think it would be a very lucrative opportunity for investors to come and invest in these solar projects,” he added.
Abbasi argued that if investors disagree with the incentives and other proposals, these can be reconsidered.
“We are also targeting megawatt generation direct to 11 kV power lines totaling 2,000 MW to be supplied directly to Discos. The government is also targeting 2,000 MW solarization for government buildings,” he said, adding that the government and the private sector will invest in this program.
He urged investors to come forward and invest in 600 MW solar power plants near 220 kV and 500 kV transmission lines.
Tanveer Barry, chairman of public sector KCCI, said the government had made a good decision on solar power and suggested the government should also focus on wind power in coastal areas of Sindh – areas suitable for wind power and capable of producing thousands of megawatts.
Local and foreign investors have raised different questions about solar initiatives with the intention of investing in renewable energy projects.
Copyright Business Recorder, 2022