PESHAWAR: The KP government has asked the federal government to retain its two public sector energy projects i.e. Madyan Hydropower Project and Gabral Kalam HPP on Indicative Generation Capacity Expansion Plan (IGCEP 2025-35) prepared by the ISMO (System Operator).
For this purpose, the Special Assistant to KP Government on Energy and Power Department, Tariq Saddozai has written a formal letter to the Federal Minister for Energy and Power, Sardar Owais Ahmad Leghari.
The content of the letter said that the provincial government has expressed surprise over the unilateral altering of the criteria for “committed projects” in IGCEP 2025-35 that has resulted in the exclusion of the KP government’s projects. It said that as per the National Energy (NE) Plan, all projects declared committed under approved IGCEP 2021 shall be included as committed projects in subsequent iterations of the IGCEP.
Therefore, the exclusion of the said projects is clearly in contravention of the NE Plan approved by the federal government pursuant to the NEPRA Act, 1997.
It said that the revised criteria introduced by System Operator is contrary to the earlier prescribed approved criteria. The system operator cannot revise the criteria for committed projects during the currency of the current NE Plan. Furthermore, the retrospective application of such revised criteria is also contrary to the law as it amounts to changing the goal post during the game.
Once a project is recognized and declared as committed project, it cannot be revaluated afresh through subsequent iterations and the revised criteria shall be applicable to the new projects that were not earlier present, not iterated projects or where the committed projects have been abandoned. Even the delays in the committed projects do not justify their exclusion rather the timelines for the commercial operations date are to be adjusted.
It has further stated that the KP government projects have already demonstrated considerable physical and financial progress after attaining the status of “Committed Projects” pursuant to the earlier IGCEPs. In consequence thereof, the KP government had also secured Generation Licenses from NEPRA, creating a vested right.
Moreover, the provincial government also understand that once the project are declared committed, the criteria of least-cost, cannot be applied retrospectively to their further processing in their development cycle. Notwithstanding, the KP projects despite achievement of the status of “Committed Projects” have been subjected to least-costs evaluation under the draft IGCEP 2025-35, which is contrary to the constitutional, statutory and regulatory framework.
It has also highlighted that public sector projects of the federal government, previously declared as committed, namely Mohmand Dam, Dasu, Tarbela Extension-5 etc, continue to remain as committed in the draft IGCEP 2025-35. In stark contrast, the government of Khyber Pakhtunkhwa’s “Committed Projects” namely Madyan and Gabral-Kalam HPPs, have been excluded, which demonstrates discriminatory approach of the system operator which should accord equal treatment to the federal and provincial power projects developed through the public funds.
On one hand the KP government projects have been approved by the federal government through the ECNEC of the Planning Commission and on the other hand, the system operator which is owned and controlled by the federal government is not recognizing the approval granted by the federal government.
It further stated that the provincial government has secured concessional financing from the multilateral lender, that is, the World Bank through the Economic Affairs Division of the federal government, through multilateral lending framework, which is signed and guaranteed by the federal government in respect of loans extended by the World Bank to the province.
The exclusion of KP projects would undermine this window of multilateral lending and would expose the government of Pakistan to the cancellation of loan/ lending and recovery of the financing charges, winding up costs, breakage costs, commitment fees etc.
The exclusion will further prevent future lending to development projects in general and power projects in particular in KP beside giving highly negative signal to the current and potential investors in the province. Thus, the system operator being an entity of the federal government is failing to recognize the financing arrangement, for the development of the power projects, which financing has been incepted, financing and closed with the approval of the federal government.
In light of the mentioned facts, grounds and circumstances, the KP government has requested the federal government to retain the projects of Madyan HPP and Gabral Kalam HPP as ‘Committed Projects’ in the IGCEP 2025-35; not allowing the System Operator to alter, modify, deviate or revise the criteria for inclusion of projects in the IGCEP in contravention of NE Plan, those approved unanimously by the Council of Common Interests vide its decision No. 2(8)/2021 CCI (48) dated September 13, 2021.
Copyright Business Recorder, 2025
