Wind projects’ tariff issues stay unresolved: Islamabad should not expect any investment from DFC: US team

ISLAMABAD: United States Treasury Department delegation led by Assistant Secretary Brent Neiman on Thursday discussed at the highest level the power sector issues including circular debt, which has choked the entire sector.

The delegation is on a two-day Islamabad visit to evaluate Pakistan’s economic situation, prospects of the International Monetary Fund’s new programme, and general business and investment climate.

Well-informed sources told Business Recorder that Washington and Islamabad have serious issues on tariffs of wind projects.

Five DFC wind power projects: US says no new investment till tariff settlement

The US has taken up this issue at the highest level with Pakistan and also conveyed that Islamabad should not expect any investment from the US International Development Finance Corporation (DFC) until tariff issues of the existing five wind power projects are settled.

DFC, sources said, has already made an offer to the Pakistani government to revise Power Purchase Agreements (PPAs) of its sponsored wind projects subject to some concession from the GoP.

According to an official statement, the meeting was aimed at exploring potential collaborations in the energy sector.

Federal Minister for Power Sardar Awais Leghari said the reform plan has been made to remove the deficiencies in the power sector.

The purpose of these reforms is to improve the energy mix of Pakistan and eliminate other deficiencies of the power sector.

The minister informed the secretary that reforms are being implemented to increase private sector participation in the distribution and transmission of electricity in Pakistan. These reforms aim to improve the quality of service being delivered to the people of Pakistan.

Regarding debt management, the minister said that Pakistan is starting a fan replacement program that will save energy and improve the seasonal variation in energy demand.

He expressed the need for US technical support to address the seasonal generation and demand gap. He also highlighted the importance of American assistance in securing international financing for Pakistan’s power sector at more favourable rates.

Copyright Business Recorder, 2024