ISLAMABAD: A group of energy sector experts have opposed the draft Alternative & Renewable Energy (ARE) policy saying it is unstructured, deficient and contradictory to various regulations and codes and fails to provide a clear roadmap for renewable energy development.

A 10-member panel of experts including former heads of public and private sector energy companies and regulators, and representatives of the provincial governments in letters to federal ministries and relevant agencies asked them to announce a workable policy that can attract fresh investment with clarity of targets.

They observed that the document finalised by the federal government appeared to be a conceptual working draft rather than complete procurement policy, based on which stakeholders, developers and investors and implementing agencies could join Centre’s efforts for immediate bankable business model.

The panel comprised former managing director of National Transmission & Dispatch Company (NTDC) Dr Fiaz Chaudhry, ex-MD of Private Power and Infrastructure Board (PPIB) N.A. Zuberi, former deputy MD of Pakistan State Oil (PSO) Sohail Butta, former director of National Electric Power Regulatory Authority (Nepra) Naveed Siddique and energy sector consultants and lawyers Dr Shahid Rahim, Sultan Farooque, Irfan Ahmad and Dr Uneeb.

Centre warned against ‘trespassing’ on the powers delegated in 18th Amendment

“Such draft ARE policy cannot be put to effect, because it is an unstructured, deficient and contradictory to various regulations and codes and does not provide any clear roadmap for the sector development,” said a report jointly finalised by these experts.

They pointed out that the rights of the provinces regarding setting up of power plants proposed in the draft policy were confused and in conflict with the provisions of the Constitution. “The role of the provinces in issuing letters of intent (LOIs) has been completely circumscribed and the provinces have been limited to developing projects” to sell energy within their own boundaries.

The experts said that if the rationale was to give full powers for planning and approving projects to the federal government as the single power purchaser, then instead of excluding the provinces from the process the new policy should require issuance of tripartite consultation and agreement among the federal and provincial governments and the investors, as was currently the case for Azad Jammu and Kashmir.

Also, the provinces are currently required under Section 13 of the Power Policy 2015 to coordinate with the PPIB on hydropower projects — a principle that should also be followed in the case of ARE projects as part of the National Energy Policy to be approved by the Council of Common Interests (CCI).

The experts were of the opinion that the federal government should retain regulatory control on integration of provincial shares in development of energy sources and the provinces must retain administrative authority to develop their own ARE resources.

“Powers delegated in 18th Amendment must not be trespassed owing to provincial sensitivities involved,” they wrote, adding that the Renewable Energy Policy 2006 being in use for more than 11 years should continue as the base document, with revised and additional clauses to accommodate federal government’s desire to contract the ARE project on a government-to-government procurement mode for far-flung areas.

The report said that the provinces should be given targets to develop renewable projects of various technologies in line with proposed national energy policy and ensure that provinces meet their targets and timings. The provinces should spell out ARE zones as per resource availability.

Given the current status of draft ARE policy, the experts highlighted the need for restructuring of certain procurement, targets, business models and agreement mode and sharing it with the provinces before it was taken up by the CCI for approval and implementation as a bankable document.

They said the current draft policy conceptualised various business models, but respective domains were not clearly defined, and they were not mutually exclusive and was making stakeholders apprehensive. The draft policy was also short of bringing out indicative figure for new generation capacity. Also, the policy did not indicate technology wise maximum or minimum capacity addition cap on a yearly basis.

The experts said the proposed policy was unclear for the developer to determine its competitive advantage in the seller market and hence failed to take into account the development of competitive market, which was a key mandate of power regulator, central power purchases and the national grid company as emphasized by the parliament in recent amendments to Nepra Act, 1997. As such, the policy for procurement was not aligned with national grid code and amended Nepra Act 2018.

The policy did not provide the year-wise share or a floor and cap for the private sector and the treatment of government-to-government project treatment made it very difficult for the private sector to work out business plan for Pakistan market. There was also no competitive bidding for G2G projects in the policy that was a seriously undesirable flaw. “The current approach is liable to fail the new ARE policy if approved in same unwanted shape. Uncertainties and missing information (criteria, capacity targets, schedules, fees and timelines etc) would be factored in by developers and push up competitive bidding price,” it said.

Published in Dawn, September 2nd, 2019