–Pilot project aimed at production of 40MW, will see 15-20pc decrease in army’s spending on electricity
ISLAMABAD: The federal government has allowed the Defence Division to purchase cheaper solar electricity in an apparent bid to save a major chunk of money coming out of the army budget for consuming 240 megawatts, Pakistan Today has learnt.
Sources privy to the matter informed that the federal cabinet has considered the summary titled ‘Generation of Solar Electricity on Build, Operate and Transfer (BOT) Basis’ dated October 10, 2019, and approved in principle the project presented by the Ministry of Defence.
Similarly, the cabinet directed the Ministry of Energy to explore the possibility of extending the tenure of the debt of Independent Power Producers (IPPs), to lower the tariff in the initial years, on the account of front-loaded debt, said sources.
Sources also said that at present the Pakistan Army was consuming 240 megawatt (MW) of electricity which cost over Rs15 billion and that expenditure was increasing every year due to rising electricity tariffs.
They said that the purchase of electricity will be at least 20-30 per cent cheaper than power distribution companies (DISCOs). According to the sources, the army has so far undertaken series of extensive studies in order to explore options to acquire cheaper electricity and solar power stands out as the best option.
The army intended to establish solar park projects of 1.5 MW each in various garrison on Build, Operate and Transfer (BOT) basis, they said, adding the pilot project was aimed at the production of 40MW of electricity.
Although “no public money will be involved in the establishment of Solar Parks and their operation and maintenance for 25 years”, a nod from the government was required to make a payment on account of purchase of electricity to the firms providing the solar electricity.
It was also informed that Public Private Partnership Authority (PPPA) and Alternative Energy Development Board (AEDB) had no objection to the proposal, while finance division and power division also endorsed the proposal.
During the cabinet meeting, it was pointed out that the indicative pricing was quite high and the sponsors should look at them carefully in the light of the sharp decline in the costs of the renewable energy in the international market.
A view was expressed that opening up the electricity market was a good idea and should be considered at a wider scale; however, the potential effects of carving out of areas out of the jurisdiction of DISCOs and the consequent results on ordinary consumer must be taken into account, particularly when large capacity payments were to be made under the old agreements.