Procurement of net-metering-based solar PV systems

The Board of Private Power and Infrastructure Board (PPIB) is all set to approve model bidding documents/contract agreements for Public Sector Entities (PSEs) for procurement of net-metering-based solar PV systems, sources close to the PPIB managing director told Business Recorder.

Sharing the details, sources said that for the promotion and development of indigenous renewable energy resources in the country and to reduce electricity bills of public buildings by meeting a certain portion of the electricity load through clean solar energy technology, the Federal Cabinet (GoP) approved the Framework Guidelines for Solar PV Initiatives 2022 (the “Framework Guidelines”) including, inter alia, Solarization of Public Sector Buildings in its meeting held on October 18, 2022.

As per the framework guidelines, the PPIB was tasked to prepare standard bidding documents and contract agreements for the solarization of public sector buildings on,(i) Lease Purchase Model (10-year BOOT basis), and (ii) Own Cost Model to facilitate the PROCURING agencies/PSEs for procurement of net-metering-based solar PV systems by the said entities. Pursuant to the directions of the federal government, the model bidding documents/contract agreements were prepared by the PPIB and approved by the AEDB Board in its 59th meeting held on December 12, 2022.

However, later on, the then prime minister (PM) during a meeting held on December 24, 2022, decided that the PPIB shall carry out the centralised bidding process on behalf of and in consultation with the PSEs upon their authorisation.

Upon selection of successful bidders, the relevant PSEs shall issue the Letter of Acceptance and subsequently, sign the contract agreements with the successful bidders. The framework guidelines were amended accordingly and approved by the federal cabinet in its meeting held on May 24, 2023.

Pursuant to the amended framework guidelines, the standard bidding documents/contract agreements were prepared by the PPIB in consultation with NESPAK, NTDC, and DISCOs and approved by the AEDB Board in its 60th meeting held on March 20, 2023.

Accordingly, the PPIB carried out the detailed design of net-metering-based solar PV systems for approximately 250 buildings through NESPAK.

Subsequently, the PPIB conducted the centralised competitive bidding for solarisation of 85 public sector buildings on own cost model, in addition to 330 buildings on lease purchase model, upon receipt of authorisation from PSEs and selected/declared successful bidders for 30 buildings.

However, during the course of competitive bidding process, the procuring agencies showed their reluctance on the conduct of centralised bidding process by the PPIB and requested to seek concurrence from Public Procurement Regulatory Authority (PPRA) in this regard.

Accordingly, the PPIB sought concurrence from the PPRA for carrying out the centralised competitive bidding process on behalf of the procuring agencies. In response, the PPRA informed that there is no such provision in the PPRA’s Procurement Regulatory Framework that allows a procuring agency to carry out procurement on behalf of any other procuring agency. Therefore, the PPRA advised that the procuring agencies may carry out their own procurements in pursuance of Public Procurement Rules, 2004, to avoid any legal consequences.

The position was submitted before the federal cabinet for consideration, wherein, the federal cabinet decided that the PSEs will carry out solarisation of their buildings on their own using the model RFP documents and contract agreements prepared by the PPIB and the PPIB will provide the technical support to the PSEs where required.

Pursuant to the decision of the federal cabinet, PPIB has prepared the model bidding documents/contract agreements for PSEs using the earlier approved standard bidding documents/contract agreements. The main changes include the conduct of competitive bidding by the PSEs themselves instead of PPIB. Furthermore, for the lease purchase model, Clause 7 of the Basic Terms and Conditions of Contract has been amended such that the Minimum Annual Energy Yield (MAEY) guaranteed by the vendor/lessor shall also include the energy not delivered by the net-metering-based solar PV system solely due to failure/non-availability of distribution system or attributable to any PSE/lessee’s acts of omission or commission.