Good news on revised IPP deals in a few weeks: power minister Awais

ISLAMABAD: Minister for Power, Sardar Awais Leghari, reiterated Friday that good news about mutually agreed revised deals with the Independent Power Producers (IPPs) will be shared with the public in a few weeks, as the task force has nearly reached a conclusion.

In a policy statement before the Senate Standing Committee on Power, headed by Senator Mohsin Aziz, the Power Minister said he had shared updated information on negotiations with the Standing Committee in previous meetings, both publicly and in camera. He reiterated that the deals with IPPs will not be revised unilaterally.

“The Task Force, which includes the whole government along with the SECP and other concerned entities, has conducted a comprehensive analysis of power generation units, including government-owned power plants’ Return on Equity (RoE), which is also used in the budget as a balance of payments or equity injected by the government. This involves tightening our own belts and balancing payments along with KIBOR plus 2 percent of outstanding dues,” he added.

Pakistan renegotiating power deals with IPPs to cut costs, minister says

The Operation and Maintenance (O&M) costs, fixed O&M, investments, technology, and other costs of each plant are being scrutinized. Progress on these matters is significant. The current level of electricity tariffs is not sustainable.

The power plants using baggasse represent only a small fraction of the overall power generation. There are other key issues to address, such as the prices of imported coal or furnace oil, the actual energy price of baggasse, and the costs of solar projects, including international project costs and technology.

He noted that some revision of O&M costs for plants established under upfront tariffs, compared to those established through competitive bidding, is also being considered. The Task Force is examining which plants are necessary for the country and which contracts can be terminated, or whose Capacity Power Price (CPP) can be canceled.

“There is a possibility of benefiting by Rs 20 per unit, but we are also exploring how the government can benefit to the tune of Paisa 50 per unit, Rs 1 per unit, or Paisa 80 per unit,” he said. The review of the power sector is almost complete, and good news will be shared with the public in the coming weeks, he added.

Leghari stated that the government has completed its review of Return on Equity (RoE) and Operation and Maintenance (O&M) costs for all power projects. The investments, technology, and other costs of each plant have been thoroughly scrutinized.

“We are not violating any contracts. Rather, we are trying to reach a position through mutual consent, where all parties, including the IPPs, understand that the current consumer tariff situation is unsustainable. All processes are being conducted with the IPPs’ confidence,” the Minister further added.

Awais Leghari further stated customer care in Discos was negligible but now customer care centres are being established in Discos on the pattern of 1122 emergency service. He said as these Centres become operational next week, Discos consumers will be able to call on universal 118 for their complaints. All calls will be registered including complaints and rectification time will be recorded.

Senators including Palwasha Muhammad Zai Khan, Senator Aslam Abro, Senator Syed Kazim Ali and Senator Haji Hidayatullah Khan registered complaints against LESCO, SEPCO and PESCO officials as losses and theft in these Discos are on higher side. Parliamentarians also raised personal issues of electricity supply in their constituencies including complaints of corruption against senior officials of these three Discos.

Chairman of the Committee also directed the Power Division to provide clarity in their reports, noting inconsistencies in their responses regarding the number of Baggasse-based IPPs operating in the country and their tariff determination.

He questioned how Baggasse was priced at $53, stating that this is where the exploitation begins, as the price of Baggasse cannot be easily determined. He suggested that the Ministry cross-check Baggasse pricing and explain why this issue arose in 2013 and 2015.

He further added that linking the price to the dollar and imported coal has created a depreciation advantage for local operators. He recommended that the Ministry review the Baggasse pricing and submit a report accordingly.

Subsequently, a detailed report on load-shedding and feeder-wise electricity distribution was presented by PESCO and SEPCO. MNA Asif Khan (NA-32) raised concerns regarding his constituency, addressing issues of mistreatment, overbilling, and electricity theft.

Similarly, Senator Mohsin Aziz pointed out the insertion of two feeders in one area, which has caused significant data discrepancies and requires cross-verification. He also highlighted discrepancies in feeder rates in the data provided by SEPCO, noting that line losses from one area seem to have been attributed to another.

In his closing remarks, Senator Mohsin Aziz recommended organizing the feeder-wise details more systematically by dividing the data into six-month periods and categorizing load-shedding under categories 2, 5, and 6 to provide a clearer picture.

He also criticized the inappropriate behavior of PESCO and SEPCO towards the public, calling for an explanation for the widespread electricity theft. Based on the report, the committee will further investigate corruption within the responsible departments.

Copyright Business Recorder, 2024