Managing Director Pakistan Electric Power Company (PEPCO) Tahir Basharat Cheema on Tuesday said that an investment of around US$ 2 billion is expected in power sector through Rental Power Projects (RPPs).
In a briefing given to media persons here, he said besides investment in power sector additional electricity of 1675 MW will be added in the system by December 2009 when nine rental power projects will start generation.
He added an overall 2250 MW electricity will be generated through RPPs in current fiscal year.
He said two rental projects have already started generation included Atlas Power (213MW) and Attock Generation (156MW) while remaining seven will start functioning by December 2009 included Nishat (196 MW), Engro (203MW), Saif Power (213MW), Fauji Foundation (176MW), Sapphire Electric Company (213MW) and Orient Power Company (213MW).
He said all proposals of RPPs were accepted only with bid bonds, performance guarantee by sponsors, monthly rental payments are to be made only after commissioning of the plant while penalty will be recovered on delay in commissioning.
He said there is no pressure from the government on any bank in the public or private sector to fund any rental project, adding, lenders to rental power companies undertake their own due diligence and take decisions based on their own financial position.
He clarified that the rental tariff for the projects is different being dependent on factors including projects are located at different sites as per system requirements and projects have different fuel consumption and different fuels.
He added others factors are variation in project cost due to difference in technology and age of machinery and variations in financing and sources and costs.
Basharat Cheema said for the first time the idea of starting rental power projects was presented in 2005 when the country was facing acute power shortfall.
He added since 2005, every government remained committed to work on RPPs to overcome energy deficit problem. He said it was the only option to have RPPs in the country as shortest possible time is required to generate electricity from RPPs.
He said there are several other aspects that favors the idea of RPPs like such projects could be installed at any place as there is no need of large area for its installation unlike IPPs.