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China Three Gorges urges AEDB to reinstate LoI of its 100MW solar project

05 Feb, 2022
According to the letter, the company opted for developing a 100MW Solar Hybrid Project at the site occupied by the Three Gorges first, second and third wind Farms already commissioned by the Company. Reuters/File
According to the letter, the company opted for developing a 100MW Solar Hybrid Project at the site occupied by the Three Gorges first, second and third wind Farms already commissioned by the Company. Reuters/File

The China Three Gorges, South Asia Investment Ltd has urged Alternative Energy Development Board (AEDB) to reinstate Letter of Intent (LoI) of its previously proposed solar project of 100MW.

In a letter to the CEO AEDB, Company’s CEO Yao Feixiong has given the reference of the Company’s letter submitted to AEDB on June 4, 2021, wherein it was requested by the company to reinstate the LoI of the 100MW Solar PV Grid Hybrid Power Generation Project at the site of 3 X 49.5MW Three Gorges first, second and third wind farms in Sindh, as during the 49th meeting of AEDB Board held on January 15, 2020 the validity period of LoI issued to China Three Gorges South Asia investment Ltd or the company for development of a 100MW solar Grid Hybrid Power Project was not extended.

The LoI performance guarantee submitted by the Company to AEDB was duly returned, thereby resulting in cessation of development rights extended to the company for implementation of proposed projects.

According to the letter, the company opted for developing a 100MW Solar Hybrid Project at the site occupied by the Three Gorges first, second and third wind Farms already commissioned by the Company.

The Company was issued the LoI under the provisions of the Renewable Energy Policy 2006 (RE Policy 2006) for development of the project. A bankable feasibility study was conducted by the Company and submitted to AEDB for approval, following which, a meeting of the Panel of Experts (POE) was convened by the AEDB to review the feasibility study in accordance with the performance related milestones of the LoI.

However, at the time the Company was informed that the RE Policy 2006 is no longer in practice and the work on finalization of a new Renewable Energy Policy has commenced and further processing of the projects will be done after issuance of new comprehensive Renewable Energy Policy, which has since been approved following the meeting of the Council of Common Interests (CCI) held on August 6, 2020 regarding approval of Alternative & Renewable Energy Policy 2019 (ARE Policy 2019).

The Company has claimed that it had spent considerable time and resources on the development of the project, however due to lack of clarity regarding applicable regime and related incentive mechanism on offer the AEDB stalled the approval process for the feasibility and ultimately cancelled the LoI due to no fault or default of any Performance Obligation of the Company.

The Company is of the view that upon issuance of the applicable AER Policy 2019 the LoI previously issued to the Company may be re-instated and Company may be allowed to the project on the basis of the justifications: (i) the Project will be developed at the site of 3 X 49.5MW Three Gorges first, second and third wind farms in Sindh. The second and third wind farms are developed under CPEC framework. In this regard, when read with the applicable provisions of the ARE Policy 2019, Project’s LoI can be reinstated under categorization of the project as a “G2G” project as the project will be located on the Site of the projects which are already developed under CPEC (G2G) framework;(ii) the feasibility study had been issued pursuant to detailed discussions and comments provided by AEDB and is unlikely to be used by any other entity for any other project; and (iii) the framework for implementing new projects will be finalized by a “steering committee” to be formed following the recent approval of the IGCEP which will determine the way forward. Possible options include implementing the RE projects (including solar hybrid projects) under a competitive bidding model whereby companies offering a competitively low tariff may be offered the option to implement the Project in locations identified by the implementing body while complying with the “least-cost generation” principles laid out under IGCEP and the applicable ARE Policy.

The company has emphasized that it is committed to contributing to the development of clean renewable energy resources of Pakistan under principles of the CPEC China Three Gorges portfolio in Pakistan that include six projects of capacity 2,630 plus MW out of which four projects are under CPEC framework. The project portfolio comprising 3x50 MW Wind power plants (including 2 x 50 MW Three Gorges Second and Third Wind Farm that have achieved COD during the year 2018 with support from AEDB are already in operation, alongside 1,124MW Kohala, 720MW Karot and 6-40MW Mahl Hydropower projects along Jhelum River which bear testimonial to company’s commitment of providing clean energy on a sustainable basis.

The story was originally published in January 5, 2022.