Riali-II hydropower to be a must run project

7.08MW Riali-II hydropower project has been decided to be made a must run on a take and pay basis by the government of Pakistan. The decision has been taking keeping in view the hydrological risk parked on the project sponsor.

It was earlier informed by the Cabinet Committee on Energy (CCoE) that Standard GoP Implementation Agreement (IA) (along with GoP guarantee at Schedule 3 thereof) and standard EPA for SHPPs may be approved; contractual obligations of AJ&K/Provincial governments arising out of and under the AJ&K IAs and Water Usage Charges (WUAs) executed based on standard AJ&K IA and WUA shall be backstopped and guaranteed by the GoP under the GoP Implementation Agreement (IA).

The Board of PPIB later on approved the standard draft along with the GoP Guarantee (in the form of Schedule 3 to the IA) for payment obligations of the power purchaser, AJ&K /provinces under and pursuant to the Energy Purchase Agreement (EPA), AJ&K IA and the Water Usage Agreement (wherever required).

On this matter, the Power Division’s views based around the standard draft Security Package Documents which have been prepared while using earlier ECC-approved security package documents for hydel projects processed under Policy for Power Generation Projects 2002 with two distinct features: (a) first, hydrological risk has been parked on power producer (though the policy provides that it will be borne by the Power Purchaser) and second, the two-part tariff regime (with separate capacity and energy payments) has been dispensed with and now a single part tariff based on “take-and-pay” with “must-run” arrangement is stipulated. The reasons for above changes were two-pronged.