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Colliding policies deterring alternate energy investors
 
 
 
Colliding policies deterring alternate energy investors

ISLAMABAD - Contrary to government claims of promoting alternative means of energy to tackle soaring electricity deficit, the allied departments are discouraging the people making investment in such projects in the country, The Nation has learnt.
Working hard and injecting huge sums since 2007, the investors seem depressed and demotivated over the years due to colliding policies of National Electric Power Regulatory Authority (Nepra), National Transmission and Despatch Company (NTDC) and Alternative Energy Development Board (AEDB), revealed an interview with investors who have been injecting money in wind power projects.
“When I started working on a 50 megawatt wind project in 2008, I estimated that project will be completed in three years, but after passing almost five years, it is yet to be started. If it starts this year, it will take another two years to add electricity to national grid, one of the Karachi-based power company investor told The Nation.
“The government lured investors into alternative energy projects by making golden promises but when we jumped in, it proved to be tiresome, expensive and time consuming,” he said.
According to investors, one 50-megawatt project costs 130 million US$, out of which 42 million is paid by investor whereas remaining is provided by the bank.
They said due to delays their costs have been doubled.
“It is a complex process. After getting letter of intent from Alternative Energy Board, we got land allotted in our name, but, getting possession of the land was again a huge challenge as locals asked for high prices for possession. There is no rule of law in that area, so we had no option but to surrender to the demands of locals, he said.
“After studies and feasibility of the land, we applied for the tariff in Nepra. After nine months of long wait they came up with something. Then we had to make frequent visits to NTDC for the grant of grid. Now finally we have been allotted grid in 2015,” he said.
He said wind power projects are new for concerning departments and they have no idea how these projects will be implemented.
According to AEDB officials, the department issued letter of intent to more than six dozens companies in 2007 and later citing lack of interest reasons cancelled it.
There are around 20 companies in the queue to complete the required documentation and start their wind projects.
Most of the companies show their displeasure with Nepra and termed it discouraging.
“They took years to approve the tariff then they put a tape of 500 megawatt, that only those companies which will come first would be included in the power tariff plan. And now they have imposed another condition on us that companies should do financial closure by September this year. Banks have their own procedures, how we can dictate them, another dissatisfied investor told The Nation.
It has been learnt that Nepra was against the wind power projects. Nepra believes that at present alternative energy projects are burden on already squeezing national exchequer.
“There are transmission line costs and then the wind is an unreliable load, what will we do in days when there is no wind,” Ogra official told The Ntaion.
He was of the view that practically alternative energy projects were burden and all the expenditures including transmission line costs, low rate of tariff and other integration costs will be too high and ultimately this cost would be passed on to end consumer, he explained.
Official said per unit costs are already high due to line losses and circular debt, which are being passed on to the consumer. This additional cost will shoot per unit tariff up, he said.
He explained that alternative energy projects were beneficial only as stand by source and not a main source. He was of the view that only way to eliminate the deficit was to reduce circular debt and controlling line losses.
Some of the investors question the role of alternative energy department (AEDB).
“This department is run on adhoc basis, they had three CEOs in past one and half year,” he said, adding, it is a very technical department and new heads take months to even grab basics, one investor told The Nation.
Alternative Energy Development Board has been under strict criticism over its failure to add alternative energy into national grid.
In 2010, the department was given a target to achieve 880 MW electricity by year-end out of wind energy without investment from GOP, and that target is still a dream.
So far two 50-megawatt companies have been operational while one 50-megawatt project is set to start production in coming days.
Another investor was not happy with the pace of work in the board.
“The departments work at snail’s pace. I applied for the extension of my letter of intent and it was extended after seven months of continuous visits. Once I got the extension letter in my hand, it was expiring in another two months, and after two months I had to run again to get the extension,” a Chinese power company manager told this scribe.
The investors also disapproved NTDC saying it does not have capacity to handle 20 wind energy projects.
“They are already dealing with around 20 IPPs. They are short of staff and resources. They cannot handle more work,” an investor said.
The CEO Alternative Energy Board did not commented despite many phone calls and text messaging the allegations. However, Nepra spokesperson Safeer Hussain, rejected the allegations and said his department was encouraging all the projects which were in national interest.
He said in its capacity Nepra was eager to support investors.

 
 
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