Pakistan has revealed that letters of credit (L/Cs) will feature in arrangements to increase private sector participation in the energy sector.

This was outlined by the Ministry of Water and Power, which has now disclosed the main features of the country's new Power Generation Policy 2015.

Policy priority

The development of a stock of privately owned liquefied natural gas (LNG) projects is a key priority in the policy.

In these LNG projects, sponsors will be required to issue a standby L/C or an appropriate revolving L/C in favour of the LNG supplier.

State incentives

Incentives to private investors to be provided by the federal government include exemptions from income tax, turnover tax, withholding and sales tax and a preferential 5% import duty will apply to plant and equipment not manufactured locally.

The federal government will also guarantee power purchase agreements.

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