ENERGY PROJECTS
I. HYDROELECTRIC POWER PROJECT 42 MW AT GUDDU BARRAGE
Background
Pakistan faces a power shortage which has reduced industrial production and economic growth.
Government of Sindh (GoS), with a view of utilizing the large reservoir of alternative energy
resources present in the country, plans to explore new avenues for generating electricity through
renewable resources. The use of renewable energy resources will reduce the dependence on
furnace oil and deliver numerous environmental and economic benefits in contrast to the use of
conventional energy inputs.
Resource Potential
Sindh is the second largest province of Pakistan, with a population of about 50 million and current
annual electricity shortfall of 1500MW. Hydro power offers an environmentally sound, reliable and
economic source of electricity. Sindh province has 42,000 watercourses with 13,234 miles of canals
and 3 major barrages with significant flows. There is a significant potential of hydropower in Sindh.
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42.4 MW hydro power potential on the Run of River (RoR) has been identified at Guddu Barrage by
M/s Ernst & Young Consultant through an initial feasibility study conducted by them. Details of
findings in the study which identify power capacities at different nodes for the establishment of the
run of river hydropower projects in Sindh are given below. The minimum potential plant capacity
at each site is shown:
Location Potential
Guddu Barrage 42.4 MW
Sukkur Barrage 30MW
Pinyari Feeder Lower regulartor at R36 0.2MW
Rohri Canal regulator at RD 118 2.50MW
Rohri Canal head regulator 5.30MW
Rohri Canal regulator at RD 15 2.70MW
KB Link canal RD 19.5 1.40MW
Nara Canal fall regulator RD 26 1.3-2.2MW
Objective
The GoS is seeking an investor to develop a hydroelectric power project of 42.4 MW at Guddu
Barrage in Sindh.
Investment Plan
Project will be implemented in a public private partnership (PPP) mode.
Project Cost per power project USD 100 Million
Equity USD 25-30 Million
Debt USD 75-70 Million
Milestones
The Government of Sindh expects to reach the following milestones for the project:
Bidding process by early 2016
Financial Closure by June 2017
Commercial Operation Date by December 2018
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Incentive
Tariff regime/ US Dollar Indexed Guaranteed Return to Investors
The tariff for the power plant will be allocated through the Cost-Plus Formula. Government of Sindh
will provide all possible support to the investor in dealing with the regulatory authorities.
Returns to Investment
Investor will enter into a 25 year Energy Purchase Agreement with Central Power Purchasing
Agency (CPPA), a wholly owned entity of the Government of Pakistan. The power project will earn a
17% Return on Equity (in current USD terms) throughout the term of the EPA, backed by
Government of Pakistan’s performance guarantee of the power purchaser for payment. The return
could increase in proportion to an increase in efficiency.
Land Provision
The Government of Sindh will provide land and access to the project site.
Tax Holidays/ Exemptions
Following holidays and exemptions are available for the project:
· 100% capital repatriation allowed through dividends
· No local equity/ investor requirement
· No capital input tax on the imports of machinery
· No corporate tax and customs duty
Legal Framework
The project will operate in a robust regulatory environment structured in accordance with the
following:
· Renewable Energy Policy 2006
· Sindh Public-Private Partnership Act, 2010
· Foreign Private Investment (Promotion & Protection) Act, 1976
· Protection of Economic Reforms Act, 1992
· Commercial Arbitration Act, 2011
· The Arbitration (International Investment Disputes) Act, 2011
· Foreign Exchange Manual 2002 of State Bank of Pakistan
· Special Economic Zones Act, 2012
· Competition Act, 2010
· Banking Companies Ordinance, 1962
· Companies Ordinance, 1984
The above mentioned statutory enactments can be downloaded from www.sbi.gos.pk. Details of the
above are also available on request.
Explicit Budgetary support by the Government of Sindh
The commitment made by the Government of Sindh which includes an off-take guarantee, will be
explicitly allocated in the provincial budget. Moreover, Government of Sindh will under-write any
debt raised for the project provided that the contractor/private investor(s) fulfill their obligations
under the project agreements
Risk Sharing
The Government will be responsible for all risks that will remain uninsured.
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