Sources reported that the land acquisition will be carried out by the NTDC during the current quarter, which is the fourth quarter (April-June) of 2022–23.
Following resistance from the Planning Division and the Power Division to re-allocate existing PSDP funds, the President has approved an amount of Rs 930 million as a Cash Development Loan (CDL) to purchase land for the Muzaffargarh solar power plant.
Sources reported that the land acquisition will be carried out by the NTDC during the current quarter, which is the fourth quarter (April-June) of 2022–23.
The loan’s terms and conditions are as follows: the principal and interest must be repaid in full within five years of the grace period, after which the loan will be due in full after 20 years. The interest will be assessed at the applicable year’s standard rate.
According to the orders governing the operation and upkeep of the assignment account, the amount will be credited to the Project’s Assignment Account No. 1200, kept in the Lahore main branch of the National Bank of Pakistan.
The associated expense is debatable to the functional-cum-object classification and will be covered by the Finance Division’s appropriation budget for FY 2022–2023. The Ministry of Planning, Development, and Special Initiatives (PD&SI) had been requested by the Prime Minister’s Office (PMO) to re-appropriate Rs 930 million in order to purchase land for Muzaffargarh’s proposed 600 MW solar power plant.
In a letter to the secretary of planning, development, and special initiatives, Sarah Saeed, special secretary to the prime minister, stated that the prime minister had requested that the ministry appropriate funds totaling Rs. 930 million for land acquisition in connection with the proposed 600-MW solar power plant at Muzaffargarh in light of the justification provided by Power Division.
The PMO also asked the Planning Ministry to, if at all possible, consult the Power Division regarding financial phasing. Another option is to submit a report for the prime minister to review.
Power Division argued in its summary to the Prime Minister that government took the initiative to install utility scale solar power plants with a total envisaged capacity of 2400 MW to mitigate the impact of ever-increasing energy cost.
The idea behind this initiative was substitution, and three locations near the current plants at Muzaffargarh, Trimmu, and Layyah were chosen. In October 2022, PC-1s totaling about Rs 6.616 billion were approved for the purchase of land measuring 2400 acres at Muzaffargarh, 2400 acres at Trimmu, and 4800 acres at Layyah. The land acquisition process was started with the help of the local administration.
In this regard, the Muzaffargarh project was given top priority, and a quick process was used to finish the land acquisition procedure because the land needed to be given to the winning bidder.
An initial estimate of Rs. 1.4 billion was made for the price of purchasing land in Muzaffargarh. However, Section 4 and the subsequent price assessment exercise were completed by the district administrations of Muzaffargarh and Kot Addu for a significantly lower price of Rs 930 million.
The Power Division has been asking the Ministry of Planning, Development, and Special Initiatives to release the necessary funds so that the following steps can be completed. The first request for the release of funds was made on January 27, 2023, and the final reference was sent on March 4, 2023, following the completion of the necessary formalities.
However, no money has yet been made available. The Section 5 process and other associated steps have been suspended as a result. The deadline for submitting bids for the 600 MW solar power plant in Muzaffargarh is set for May 8, 2023, and bidding is currently underway.
Power Division argued that given the circumstances, it appeared that if the land acquisition process wasn’t finished before this date due to a lack of funding, the project’s completion schedule would also be negatively impacted.
The sources added that in order to reduce the cost of generation and provide assistance to the lower classes of society, the government had presented these solar replacement projects as its flagship initiative to the IMF and other donors.
In a note to the Secretary to the Prime Minister, the Power Division asked the Ministry of Planning and the Ministry of Finance to at least release the funds for the acquisition of land for the Muzaffargarh project, which would cost Rs 930 million according to the land assessment report.
In a previous communication, the Ministry of Planning, Development, and Special Initiatives had informed Power Division that it would not be feasible to provide additional funds in the amount of Rs. 3.958 billion as a cash development loan (CDL) to Power Division for two unbudgeted projects approved by the Central Development Working Party (CDWP) on October 28, 2022, titled land acquisition for installment (Rs 2.558 billion).
Power Division was advised by the Ministry of Planning, Development, and Special Initiatives to look for savings within its budgeted portfolio and re-appropriate funds during the CFY to complete the least urgent requirements of these projects.
The Ministry of Planning, Development, and Special Initiatives had also suggested that Power Division approach Finance Division for the provision of necessary funds as CDL through Supplementary Grant for both projects, over and above the size of PSDP 2022–23, in the event that savings are not available within the budgeted portfolio.