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Mega hydel projects: Govt studies plan to offer stake to private investors

Mega hydel projects: Govt studies plan to offer stake to private investors

ISLAMABAD – The government is mulling over a plan to offer partnership stakes in mega hydroelectric power projects along with management control to private-sector investors in an attempt to remove the financial hurdles arising in the wake of different priorities of international donors.

According to officials aware of the developments, Pakistan Water and Power Development Authority (Wapda) Chairman Zafar Mahmood floated the proposal in the new hydroelectric power policy. He gave a presentation on the policy to Prime Minister Nawaz Sharif and members of the cabinet committee on energy in a meeting held here on June 25. He also blamed strict regulations and prolonged procedures for project financing for the delay in developing the projects. In order to stimulate private-sector investment in mega hydel power projects, Mahmood suggested three different options depending on project stages.

The first option relates to the projects where the detailed engineering design has been prepared. In this case, the government could invite investors to finish the project according to the approved design – Bunji hydropower project is an example in this regard. An international panel of experts will be engaged for the selection of bidders. 2

The second option pertains to the projects where the detailed engineering design has not yet been made. Under this plan, investors will develop their own design as the cases of Thakot and Patan hydropower projects suggest.

The third option deals with the projects that are in the process of development and construction. Here, partnerships will be developed on the basis of remaining investment such as the case of Neelum Jhelum hydropower project. The partners will be selected keeping in view their ability to arrange the remaining financing and complete the project swiftly.

 Mahmood told the cabinet committee that the private-sector partner would enjoy management control over the project during the remaining period of construction and also after completion if the National Electric Power Regulatory Authority (Nepra) calculated his percentage share of financing at more than 50%. In all the options, preference will be given on the basis of early completion of the project. According to Mahmood, Pakistan has the potential to produce 100,000 megawatts of hydroelectric power. Of this, the identified potential stands at 60,158MW, but only 6,919MW has so far been tapped. The first hydroelectric power development policy of the country was framed in 1995 and the second and third policies were introduced in 2002 and 2013 respectively. However, Mahmood said these policies did not prove to be a source of attraction for the private-sector investment.

3 The private sector contributed 7,423MW to the thermal power generation and only 84MW to the hydroelectric power production. “Hydroelectric power projects are difficult to execute through the private sector,” he added. Outlining the state’s financial constraints, he pointed out that the donors had their own policies and priorities for financing development projects. They had sensitivities pertaining to the dislocation of people, loss of employment and heritage, the way of life and the negative impact on environment, he said, adding the country had also stringent regulations and lengthy procedures for project financing. He was of the view that the Indus River had a huge potential for electricity generation, which should be tapped, and cited examples of China and other countries which had harnessed their hydel power potential effectively.—TRIBUNE NEWS

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