Cheap power producers to be included in system: Leghari

ISLAMABAD: The government has announced ending of upfront tariff regime for the indigenous renewable energy generation projects and decided to awards future contracts in the sector through competitive bidding. Hydel power plants with less than 50 MW of generation capacity would also go through competitive bidding.

Minister for Energy (Power Division) Awais Ahmad Khan Leghari said in news conference here Wednesday that the government would include in the system who will produce cheap electricity, adding that there is no power loadshedding in the country. The government has 1000MWs of such projects in pipeline in wind and solar energy sector which would be awarded to contractors through competitive bidding in weeks to come, he said.

“Previously the decisions regarding power policy were taken in emergency when the system was in ICU, but for the first time we have the opportunity to make decision with maturity,” the minister said.

“It’s time to fulfill our promise of cheap electricity to the consumers. Now investors would be invited for the competitive bidding to get the lowest rates and pass on maximum benefit to consumers,” Leghari said.

“Within eight weeks you will see the competitive bidding for award of generating 400 megawatt wind and 600 MWs solar electricity,” the Minister claimed.

Flanked by Minister of State Chaudhry Abid Sher Ali, Leghari said that the under the renewable energy policy 2006, upfront tariff regimes were introduced for induction of a new technology and to overcome power shortage. As the technology is evolved and technical data is available, it is high time that the regime of tariffs is changed and more competition is brought to these sectors while promoting and incentivizing introduction of renewable in the national grid.

Earlier special rates were been offered to the power generation companies in shape of upfront tariff which has encouraged these companies for investment in Pakistan. The situation has improved, as the country has surplus electricity, and the cabinet committee on energy (CCOE) has permitted to change those rules.

The Renewable Energy Policy 2006 (amended 2013) covers projects under Solar, Wind, Bagasse and small hydel sources. The policy specifies Mandatory purchase of electricity, Hydrology risk for small hydropower projects to be borne by power purchaser and Wind speeds and solar risk to be borne by power purchaser.

The prevailing tariff regimes are either upfront or cost plus where the wind upfront tariff is now Rs. 6.74/unit, Bagasse Tariff is Rs7.97/unit, Small hydel upfront tariff is about Rs12/unit.