Foreign investors resent bureaucratic hurdles in energy projects

KARACHI: Foreign firms, setting up power generation projects in Pakistan, resent bureaucratic hurdles hobbling their progress and urge the government to build a one-window system to expedite the work on energy projects.
“There should be a one window operation to facilitate investors, especially those [projects] which come under the umbrella of China-Pakistan Economic Corridor (CPEC),” said Liu Kai, chief executive officer at Zonergy Pakistan, which is setting up 900 megawatts of solar power generation project.
“One window system will bring efficiency in working as well as cut cost of doing business,” Kai said.
Investors from China, Europe and USA are undergoing long departmental procedures to get various permissions as they have to deal with a number of departments.
For the financial close alone, they have to engage with Alternative Energy Development Board, Central Power Purchasing Agency, Securities and Exchange Commission of Pakistan, and State Bank of Pakistan.
Analysts said this is consuming time and resulting in missed deadlines.
“We are dealing with too many departments and have furnished a number of bank guarantees everywhere,” said a senior official at another foreign company, requesting anonymity.
“It seems the departments are deterring investors instead of facilitating them.”
Sohail Khan, chief executive officer at Storm Harbor USA said there is a vicious circle as departments forward a file from one place to another, “which results in delays.”
“Their processes are inter-linked; until the department A does its job the department B wouldn’t do anything,” Khan said.
“We are awaiting [new] tariff…there is no delay on our part and the government departments are responsible.”
Khan said there has to be a one-window operation “to speedily process the formalities, otherwise the investors may shy away.”
He termed the existing solar tariff quite appropriate, saying any cut in tariff will render solar power projects in Pakistan unfeasible.
The proposed reduction in solar tariff from the existing 14.15 cents/unit has become a nightmare for the foreign investors who have already invested millions of dollars.
The current tariff is effective till December 31, 2015 and the National Electric Power Regulatory Authority (Nepra) has proposed 9.25 cents/unit for 2016.
Officials at Rob Mc Nabs of Eversheds, a European firm, said the authority had done no homework and there was no data available to justify the proposed tariff.
Moreover, the tariff applications are lying with Nepra, which is using various tactics to delay the process, said the officials.
Khan of Storm Harbor said if the tariff is cut more than half a cent, “they will have no choice but to wind up operation.”
An analyst feared that such a treatment to investors particularly those under CPEC will send a bad message internationally and may blacken a future investment prospects in Pakistan.
The coal power projects under CPEC are also facing bottlenecks. Thar Coal and Energy Board has not yet allotted the coal tariff despite a lapse of almost a year.
Sino Sindh Resources has been allotted Block-I of Thar coalfield for coal extraction, while Shanghai Electric will set up four independent power producing plants of 350 MW each at the mine’s mouth.