Despite multiple revisions in incentives and extended deadlines, the government’s attempt to secure investors for a 600-megawatt solar power project at Muzaffargarh faces a setback.
Challenges in Acquiring Renewable Energy Investments
The Private Power & Infrastructure Board (PPIB), the one-window power sector entity of the federal government, experienced a major setback as no bids were received for the ambitious solar project. This initiative aimed to acquire renewable energy through international competitive bidding, aligning with the long-term Indicative Generation Capacity Expansion Plan (IGCEP).
Struggles Despite Policy Adjustments
Despite several rounds of bidding and revisions in incentives since late 2022, no investor submitted a bid by the January 11 deadline. The lack of interest is attributed to overall political uncertainty, macroeconomic conditions, the country’s credit rating, and risks associated with the power sector.
Government’s Efforts and Fast-Track Plan
The government, in September 2022, approved a fast-track plan to develop large solar projects through private sector investment, part of a broader initiative to introduce 10,000MW of solar energy. However, despite removing the benchmark tariff, offering higher interest rates, and flexible project schedules, the project failed to attract bidders.
Implications and Future Considerations
With a circular debt exceeding Rs2.6 trillion and outstanding payments to Chinese investors, the power sector faces significant challenges. The caretaker government is receiving advisories to delay bidding until the formation of a new government, allowing a fresh perspective and potential government-to-government negotiations for solar capacity expansion.
While prevailing macroeconomic conditions, a lower country rating, and political uncertainty contribute to the poor investor response, the government contemplates a fresh bidding round in April-May. This strategic approach aims to address challenges, fostering a more favorable environment for private sector investment in the renewable energy sector.
Source：dawn.com
