Bureaucratic hurdles: KP’s four hydropower projects delayed for three years

PESHAWAR: Khyber Pakhtunkhwa’s four 244.4 MW renewable and cheap electricity hydropower projects are stalled due to negligence of the Ministry of Energy (Power Division) and PESCO for the last three years.

The projects are pending due to non-approval, notification, import certificates, and purchase agreement. Similarly, Pakhtunkhwa Energy and Development Organisation (PEDO) has an arrear of Rs7,147.604 million in electricity sales to the federal government.

A reliable government source told this correspondent that the projects were delayed due to bureaucratic hurdles, which are hampering the production of cheap electricity, while Prime Minister Imran Khan is focusing on cheap hydropower generation in the country. Ongoing hydropower projects are also being affected due to non-payment of dues.

According to documents available with this correspondent, the PEDO for the first time in Pakistan for hydropower projects conducted internationally competitive bidding in February 2016 for six projects of 518 MW based on the lowest trellised tariff. After evaluation, M/s Master Hydro was recommended as the first ranked bidder for 99 MW Arkari Gol HPP and M/s Saifco Energy for 102 MW Shigo Kas HPP.

However, the tariff for 102 MW Shigo Kas HPP was approved in February 2018 while 99 MW Arkari Gol HPP was approved in June 2018 by Nepra. The Nepra has shared the approved tariffs with the Ministry of Energy (Power Division) for notification in the Official Gazette of Pakistan. However, the Ministry of Energy (Power Division) notification is not yet issued despite all possible follow up by the KP government.

Likewise, import of machinery of 40.8 MW Koto HPP is pending since January 2020 due to non-issuance of import certificate although the generation licence has been issued and tariff determined by Nepra. Moreover, under the Fifth Schedule Custom Act 1969, the Power Division federal Ministry of Energy is supposed to issue import certificates for those hydropower projects which will supply electricity to the national grid. Due to the non-supply of machinery, the project could not be commissioned. Some of the machinery got auctioned in April 2021 at the Karachi port due to delays and the progress on project suffered badly. Similarly, another 2.6 MW Machai project was completed in November 2017 but PESCO has not signed a purchase agreement without any justification.

On the other hand, the federal government has to pay arrears of Rs 2767.172 million of Malakand 3 Hydro Power Project (HPP), Rs124.77 million, Machai, Rs191.04 million of Ranolia HPP, Rs2,779.48 million, Daral Khawar, and Rs1285.142 million of Pehur HPP to PEDO.

According to available data, the federal government has to pay arrears amounting to Rs1286 million for the Malakand 3 hydropower project. In addition to that indexation claim of Malakand 3 amounting to Rs 1,481.172 million is also pending notification in the Power Division. The 2.6 MW Machai project was completed in November 2017. PEDO has sold electricity at the rate of Rs5.469 kWh since the inception of the project. Around an arrear of Rs124.7 million is pending against Wapda.

Similarly, the 36.6 MW Daral Khwar project started generation in April 2019 with a tariff rate of Rs8.437 per kWh. An amount of Rs2779.48 million is outstanding against the federal government. Another 17 MW Ranolia, project was commissioned in February 2020 and the rate was fixed at Rs4.0147, however, an amount of Rs191.04 million is pending towards Central Power Purchasing Agency (CPPA).

According to details, Pehur HP project was commissioned in March 2010 but the federal government has paid only Rs3 billion and an arrear of Rs1285.142 million is yet to be paid to PEDO.

PEDO Chief Executive Muhammad Naeem told this correspondent that KP has a huge potential to generate more than 30,000 MW of hydro power and the provincial government is providing all resources to PEDO to generate cheap electricity from the province. The hydro projects are a source of affordable energy and a major source of revenue for the province.

He said PEDO has already registered certain hydro potential raw sites of 711 MW to the private sector investors on a first-come-first served basis under the KP hydropower policy 2016. However, further process was stalled due to the suspension of the KP hydropower policy 2016 by the Peshawar High Court in November 2018. Later on, the litigation was successfully concluded in December 2020.

Two LOIs have been issued to the Korean state-owned companies under G2G arrangements for the development of 215 MW Asrit-Kedam HPP in IPP mode 496 MW Lower Spat Gah HPP. These projects will be initiated in due course of time after completing codel formalities.