PPIB Asks for Fixed Markup Rate on Cash Loans For 3 Big Solar Projects in Punjab

The Private Power & Infrastructure Board (PPIB) wants a fixed interest/mark-up rate on Cash Development Loans (CDLs) for three solar panel PV projects in South Punjab.

PPIB Managing Director Shah Jahan Mirza has told the Power Division in a letter about purchasing land for installing large utility-scale solar PV projects and said it must be bought by NTDC and leased to project sponsors by the Government of Pakistan via the PPIB, reported Business Recorder.

NTDC is currently in the process of acquiring land locations for three solar PV projects:

1. 2,400 acres for the 600 MW Muzaffargarh solar PV project;
2. 2,400 acres for the 600 MW Jhang solar PV project; and
3. 4,800 acres for the 1,200 MW Layyah project.

PC-1 estimates three locations to cost Rs 1.2 billion, Rs 2.4 billion, and Rs 2.4 billion, respectively. The acquisition process and subsequent implementation of the utility-scale solar PV project are expected to take at least five years.

The land cost, including mark-up rates, will be recovered from the project sponsors per their Security Package Documents (SPDs), including the land lease agreement. The project sponsors must make annual lease payments beginning with the Commercial Operations Date.

The PPIB viewed that for defining yearly land lease payments, including interest/markup rates and tariffs for solar PV projects, a fixed interest/markup rate for the CDLs is necessary. And given the estimated project development timeframe of five years for big utility-scale solar PV systems, a five-year grace period for paying back the CDL should be part of the discussion.

The PPIB has advised the Power Division to take up the matter with the Finance Division for approval so that it can be pursued further.