ISLAMABAD: Amid controversy over the extension of a 20MW hydropower project to 40MW, the Centre is facilitating the Gilgit-Baltistan administration to set up an energy regulatory authority and an energy development organisation for exploitation of hydropower potential in the region.

Informed sources told Dawn that a recent meeting of the Central Development Working Party (CDWP) deferred the approval of the 40MW Hydropower Project Hanzel in Gilgit due to controversy over the increase in project capacity without prior approval from the relevant forums. The project cost has increased from Rs12.1 billion in May 2021 to Rs20.23bn in December 2023, and construction is yet to commence.

While the Planning Commission supported the capacity enhancement, it had reservations that a contract had already been awarded to a firm for 20MW which suggested increasing it to 40MW. Furthermore, the contract for 40MW was also given to the same firm without fresh bidding, clearance from the Pakistan Engineering Council, or approval from the relevant forums like the CDWP and the Executive Committee of the National Economic Council (Ecnec), which had approved the 20MW project.

The Ecnec had previously allowed the 20MW project with conditions for the establishment of an independent transmission and distribution company, the establishment of a regional grid, revision of the electricity tariff structure, and devising a mechanism for relending foreign loans and improving the collection of electricity revenue.

Centre defers approval for 40MW project amid concerns, increased cost

In the meantime, a complaint was lodged by the local community regarding the violation of guidelines from both the Planning Commission and the Public Procurement Regulatory Authority (PPRA) rules during implementation. The central government has directed the GB government to address these issues at the earliest, before project approval and execution.

Planning Commission sources said the GB administration had already prepared two legal documents: the Gilgit-Baltistan Energy Development Organisation (GBEDO) Act and the Gilgit-Baltistan Electricity Regulatory Authority Act, as suggested by consultants and supported by the centre. Both draft acts have already been submitted to the Gilgit-Baltistan Reforms Commission (GBRC), which will forward its recommendations to the GB Cabinet before formal legislation by the GB Legislative Assembly.

The post-legislation phase will witness the establishment of two distinct departments. The GBEDO will be empowered to deregulate functions and establish multiple generation companies, alongside a distribution company dedicated to GB. Simultaneously, the GB energy regulator will be tasked with overseeing the energy sector, ensuring autonomy in investment decisions, and determining tariffs.

The primary objective of this regulatory authority is to align Gilgit-Baltistan’s existing tariff structure with national standards. Both legislative activities are targeted for completion by June this year, marking a transformative leap towards achieving a more efficient and transparent energy sector in GB, which is not connected to the national grid, and the electricity demand of the area is mostly met by isolated micro and small hydropower stations installed on various rivers and nullahs.

Despite being one of the most attractive destinations for national and international tourism, the GB region is currently facing an acute power shortage, especially in the winter season. The shortfall could exceed 70MW (excluding thermal energy) during the winter months, primarily in January and February, according to the project documents. To ensure balanced regional development and uplift, the Centre has allocated special provisions of Rs39.5bn in the federal development programme for the current year, FY24.

The Hanzel Power Project will have its own 132kV transmission line spanning about 20km and a grid station for the transportation and dispersal of energy. The energy from this grid will be integrated into the existing distribution system available at the already established grid station near Hanzel. Another related project, the ‘Establishment of Regional Grids,’ has already been approved by the federal government earlier this year and is currently in the execution phase.

Published in Dawn, March 4th, 2024