MUSHTAQ GHUMMAN
ISLAMABAD (July 04 2009): The government is reportedly set to remove all legal hitches in the establishment of an electricity entity in Northern Areas, which would be referred as 'Northern Areas Electricity Development Company' (NAEDC), with the objective of facilitating private investment in hydropower projects, sources told Business Recorder.

This decision was taken in a meeting of the Economic Co-ordination Committee (ECC) of the Cabinet on a proposal submitted by the Ministry of Kashmir Affairs and Northern Areas (Kana), by Minister Qamar Zaman Kaira. The background of this decision was a controversial Letter of Interest (LoI) issued by the Alternative Energy Development Board (AEDB) to Tassaq Energy, owned by (retired) Major General Sikandar Hayat Khan who showed intention to establish an independent power producer (IPP) project of 16-20 MW in Northern Areas on Gilgit river.

On this, Prime Minister Secretariat directed Kana to convene a meeting of all stakeholders and resolve the following issues: (i) who will be the client? Wapda, Finance Ministry or the government of Northern Areas? (ii) who will be empowered to set the tariff and give the IPP the licence? Nepra or any other agency? (iii) which agency will pay return on investment to the IPP?

These issues were also raised by the Planning Commission. Sources said that Kana Ministry convened a meeting of all stakeholders wherein it transpired that keeping in view the limited resources, capacity and mandate of Northern Areas Electricity Department and the potential of power generation in the Northern Areas through IPPs, establishment of regional grid, extension of national grid in Northern Areas, establishment of NAEDC, purchase of electricity from IPP and return on investment are the major issues that need to be tackled before an IPP can be established.



A SUMMARY WAS SUBMITTED TO PRIME MINISTER TO SEEK APPROVAL TO INITIATE FORMAL PROCEEDINGS ON THE FOLLOWING LINES:

i) Initiate steps for the establishment of NAEDC.

ii) Look into the legal aspects of extending the jurisdiction of Nepra to Northern Areas.

(iii) Co-ordinate with Planning Commission, Finance Ministry and Water and Power Ministry to plan extension of the national grid and the establishment of regional grid in Northern Areas.

Sources said that the Prime Minister endorsed the recommendations of Kana Ministry and directed that the matter should be placed before the ECC. According to sources, the ECC was informed that in January 2008, AEDB had issued LoI for establishing an IPP on Gilgit River, but resolution of a few legal and administrative issues was required so that the project should progress.

Sources said that issuance of LoI by the AEDB became contentious when some ECC members observed that the Board had no jurisdiction to issue LoI for a hydropower project. It was also pointed out that other major projects in Northern Areas would make the area a surplus producer of electricity. In any case, establishment of regional grind and generation/marketing company was desirable and should be progressed alongside the construction of dams/power generation facilities.

http://www.brecorder.com/index.php?id=932282