ISLAMABAD: The government has announced that it will invite bids for setting up renewable energy projects in the country in a bid to tap the investment potential of $40 billion.
In the new renewable policy, the government will abolish upfront tariff and replace it with competitive bidding to attract investors to enhance the share of renewable energy to 30% in the energy mix.
Speaking at a press conference on Wednesday, Federal Energy Minister Omar Ayub Khan unveiled the Alternative Energy Development Policy 2019, stressing that the country had potential for $40 billion worth of investment in renewable energy.
“The government is eyeing 30% renewable energy in the system by 2030 and together with hydroelectric power it will be 60-65% of the energy mix,” the minister said while announcing the revised renewable energy policy.
He was of the view that the previous government had introduced expensive re-gasified liquefied natural gas (RLNG)-based electricity, which was costing around Rs17.5 per unit and multiplied the circular debt.
“Investment has already started pouring in as the government has signed renewable energy agreements with 12 companies, which will bring $700 million worth of capital,” he said.
The minister revealed that besides generating renewable energy, the investors were also interested in the manufacturing of solar panels and wind turbines in Pakistan. “Danish, Chinese and Japanese companies have expressed interest in the manufacturing of wind and solar equipment in Pakistan.”
He reiterated that 80% of electricity feeders were free from load-shedding in the country as with the help of various measures an additional revenue of Rs229 billion had been generated.
Talking about salient features of the renewable energy policy, Special Assistant to the Prime Minister on Petroleum Nadeem Babar said the upfront tariff had been abolished and now all future tariffs would be based on competitive bidding.
“The government will set the target every year and will invite investors to submit bids. As per the target, the share of renewable energy will be ramped up to 20% by 2025 and 30% by 2030,” he said.
By 2025, the combined share of renewable energy and hydroelectric power would be 52% and by 2030 it would reach 63% of the energy mix, he added.
“Current renewable energy policy is totally different from the previous one as earlier investors used to choose the site, fuel and cost but now we have changed it,” Babar revealed.
“Now, the government will provide the site, identify the type of energy and award contract to the lowest bidder.”
Speaking on the occasion, the Power Division secretary said the policy would be sent to the Council of Common Interests (CCI) for approval. “All the provinces have been given the basic role and more say in decision-making regarding renewable energy projects,” he said.
Replying to a query on government-to-government agreements under the new policy, the secretary said such deals would be only for the under-developed areas in Balochistan and Gilgit-Baltistan while for the rest of the country, competitive bidding would be held.
Responding to a question about capacity payments to the wind and solar power generating companies, the special assistant on petroleum stressed that there would be no capacity payment in the new policy and the companies would be paid for energy generation only.
In response to a question on payment of damages to Turkish rental power company Karkey, the energy minister replied that no payment had been made to the company.
Regarding the Neelum-Jhelum project surcharge, he announced that it would be abolished soon but gave no deadline.
Published in The Express Tribune, November 21st, 2019.