Standard documents of SHPPs: PD asked to seek guidance from CCoE

Ministry of Planning, Development and Special Initiatives (MoPD&SI) has advised Power Division to seek guidance from Cabinet Committee on Energy (CCoE) with respect to clearance of standard documents of Small Hydropower Projects (SHPPs) and clarification on previous decision, well informed sources told Business Recorder.

The MoPD&SI has offered its comments in response to a letter of Managing Director Private Power & Infrastructure Board (PPIB) Shah Jahan Mirza in which the latter was requesting resolution of standard documents related issues.

According to MD PPIB, the organisation is processing for the first time documents including Implementation Agreement (IA), Energy Purchase Agreement (EPA), Water Use Agreement (WUA) and for projects within the AJ&K territory, the GoAJ&K Implementation Agreement (AJ&K IA) (collectively the standard documents), which were prepared by relevant entities under the Policy.

The Board of PPIB in its meeting held on June 1, 2020 constituted a committee comprising of Member Energy, Planning Commission, Secretary Energy GoKPK, Joint Secretary Ministry of Energy (Petroleum Division), and CFO CPPA-G to review the standard documents and present its findings to the Board.

After consideration and consultation by the committee, the security documents were again presented before the Board in its meeting held on January 4, 2021, which authorized submission of summary for approval of standard documents by the ECC. Accordingly, the draft summary was submitted to Power Division on January 18, 2021. However, after addressal of several clarifications and receipt of comments from various stakeholders, the final summary was submitted to the ECC by the Power Division on October 4, 2021.

The ECC considered summary on October 7, 2021 directed the Power Division “to first place the matter before the Cabinet Committee on Energy (CCoE) for consideration and then to the ECC for matters falling within its domain. Accordingly, the matter was placed before the CCOE. Reportedly, the CCOE deliberated the matter in detail and approved the concept of “take and pay” with “must run” condition with respect to two committed SHPPs under the IGCEP (for which LoSs have already been issued by PPIB), i.e., 7.08 MW Riali-II and 8 MW Khathai-Il hydropower projects, both located in AJ&K. However, the recorded decision of the CCoE only mentions that “directed Power Division to review standard security agreements for SHPP under 2015 Policy in consultation with relevant stakeholders to align the recommendations with the Cabinet-approved fundamental principles of “moving to competitive market” and “ No must run projects” and submit it for consideration of the CCOE”.

PPIB has claimed that reportedly Power Division also took up the matter for clarification of CCoE’s decision with respect to clearance of standard documents by the CCoE for the two SHPPs.

Whereas, on the other hand, Power Division, in its letter on November 29, 2021 has also requested Nepra’s views/ comments with regard to standard documents in view of its tariff determinations for SHPPs and observations of the CCOE. Response from NEPRA is still awaited.

PPIB maintained that as per the terms of the LoS, RHCL is required to execute project agreements with relevant entities in order to achieve financial closing, initial deadline whereof was April 15, 2021. However, due to delay in approval of the standard documents, the Board granted extension for achievement of financial closing by April 14, 2022.

In the current circumstances, PPIB is of the view that decision with regard to execution of standard documents with regard to two SHPPs and their approval from the requisite forums is imperative to enable achievement of financial close by them in accordance with the terms of the already issued LoS. Otherwise, any further delay in approval of the standard documents by the relevant forums may require the Board to grant further extension of time for achievement of financial close by these SHPPs which will further disturb the timeline in Indicative Generation Capacity Expansion Plan (IGCEP) for these projects of committed category or may also jeopardize implementation of the said SHPPs.

The sources said, Power Division, which is administrative Division of PPIB, sent the PPIB letter to MoPD&SI for comments, which has advised that the matter may be presented before the CCoE to seek direction for appropriate action on this issue.

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