To remove the administrative bottlenecks in attracting foreign investment in the hydel power sector, the Water and Power Development Authority (WAPDA) has come up with a draft mega hydel power policy in consultation with the provinces.
The policy will soon be submitted for approval to the Economic Coordination Committee and the Council of Common Interests.
WAPAD held a consultative meeting for the purpose with the representatives of the provinces, Azad Kashmir, Gilgit Baltistan, FATA, Planning Commission, Ministry of Finance and NEPRA on Tuesday.
Briefing media personnel after the meeting, WAPDA Chairman Zafar Mehmood said the policy has been especially drafted to remove irritants that keep away private sector investment in the hydel power sector. The government had given four hydel power policies in 1995, 2002, 2013 and 2015 to attract the private sector but only one project of 84 MW materialised in the last two decades.
The policy envisages that WAPDA will conduct the feasibility study, prepare detailed engineering design, conduct environmental impact assessment, acquire land and resolve resettlement issues, provide road access and security, liaison with the government departments and get tariff approved from the National Electric Power Regulatory Authority (NEPRA).
All of this is time consuming and expensive. The WAPDA chairman said the process to meet all these requirements leads to shying away of the potential investors, he said adding that once all the tasks are complete, the project will be presented for international competitive bidding.
Usually the projects are awarded on the tariff bidding basis but this leads to cost escalation and time delay. In some cases the competitors bid at 20 per cent lower than the estimated cost and then they use different tactics to revise the project cost, he said.
We have proposed to hold bidding on the basis of completion time. This is a novel proposal tested no-where in the world but we are confident this can be successful implemented. Only hardcore investment will be required to be made on a pre-determined tariff for 30 year life of the project, he added.
When asked about the provincial reservations, he said, the provinces have no concerns and they have agreed to the policy. All stakeholders were consulted during the process.
“We floated the initial draft policy to all the stakeholders. They gave their comments and we gave our point of view. Today they were again consulted on the draft. It will be now sent to the Ministry of Water and Power for submitting it to the ECC and CCI for approval,” WAPDA Chairman Zafar Mehmood said.
Mehmood said that according to estimates if the economy continues to increase at five to six per cent per annum in the next few years then 35,000 MW would be required by 2025.
“This requires huge investment. WAPDA and government alone cannot provide the necessary resources. The private sector will have to participate.”
About potential investors, he said that many Chinese companies are ready to invest on the basis of build operate own and transfer (BOOT) basis. They want to be deal with the project exclusively but are not interested to participate if the project is to be put for international competitive bidding, he said. There is also an intense competition among Chinese companies for international projects.
Pakistan has potential for more than 100,000 MW of hydel power. The Indus cascade alone has the potential of 40,000 MW. The seven identified projects on Indus include 4,500 MW Diamir Bhasa dam, 7,100 MW Bunji dam, 1,200 MW Skardu, 2,200 MW Tungas, 2,800 MW Yulbo, 2,400 MW Patan and 4,000 MW Thakot dam.
“We can build the Diamir Bhasa dam and can award the power generation to investors. Similarly second phase of Dassu could be awarded to the private sector. The investors will save money if they complete the projects earlier and will get additional revenue from selling electricity. All the existing tax exemption for investment in hydel power sector will be retained,” he said.
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