SPA with KE, revised agreements with IPPs: Senate body expresses annoyance at PD’s failure to furnish copies

ISLAMABAD: Senate Standing Committee on Power on Thursday expressed annoyance at Power Division’s failure to provide it the copies of Sale Purchase Agreements (SPA) with KE and revised agreements with Independent Power Producers (IPPs).

Presided over by Senator Saifullah Abro, the Committee was given a detailed briefing on agreements with the IPPs along with technology, circular debt and reasons for its growth, KE’s agreement and its payables and receivables.

Secretary Power, Ali Raza Bhutta informed the committee that the Power Division is considering using a specific quantity of local coal in imported coal-fired power plants. He said 15 projects of 3035 MW were established under the power policy 2002.

A presentation given to the Committee says that the federal government issued the policy framework and package of incentives for power sector generation projects (policy 1994) in March 1994 in the face of an acute power shortage in the country. The government estimated a conservative 8 per cent demand growth over the next 25 years. Two projects - Hubco and Kapco - were established before the announcement of the 1994 Policy.

“We are thinking of conducting a study on volume of investment and saving in case some percentage of local coal is used in imported coal-fired power plants,” he added.

The Secretary Power pointed out that the countries that are giving lectures to us on hazards of coal are generating far more electricity from this fuel than Pakistan.

Some of the members raised the issue of unscheduled load shedding of “18 hours” in KPK at a time when the government claims that generation is over 24,000 MW.

Additional Secretary Power Division, Waseem Mukhtar stated that 13161 MW hydel generation will be added to the system by 2028. Presently, hydel generation is 9436 MW. In 2020, hydel generation was 23,470 MW.

Managing Director NTDC Muhammad Ayub informed the committee that currently demand is around 26,500 MW whereas generation recorded at 24,280 MW on July 7, 2021 of which the share of hydel generation was 4,794 MW. He said 1000 MW electricity is being supplied to KE.

He also shared generation from different sources, including, Wapda, IPPs hydle, IPPs, Gencos, wind, solar and bagasse.

During the course of hearing, some Committee members showed their ignorance about electricity from bagasse. One Senator, who is a senior man in PTI, enquired: “what is baggase?” Another Senator, who was Chairman of Power Standing Committee for a few years, thought bagasse is Chukaandar (beet).

Senator Fida Muhammad said that copies of agreements with IPPs and KE should be shared with the committee so that it is aware of the date of expired pacts.

The officials of CPPA-G informed the committee that Rs 260 billion was added to the circular debt during the first eleven months i.e. July-May 2020-21, of which Rs 60 billion is of KE.

Senator Talha Mehmood said he was surprised to see the figures of circular debt. When he enquired from Chief Executive Officer (CEO), KE, Moonis Ali as to why the power utility is not paying Rs 60 billion for power it purchased during the year, he replied that the volume of power utility receivables is about Rs 300 billion against federal and provincial governments.

“We are ready to pay the reconciled amount and have already asked federal government to deduct this amount from its receivables,” he added.

Additional Secretary Power, Waseem Mukhtar informed the committee that the issue of receivables and payables would be resolved through arbitration.

At this CEO KE said that his company is also ready to resolve receivables/ payables dispute through arbitration, adding that whatever decision will be taken by the Arbitrator, must be accepted by all the concerned parties.

The Standing Committee expressed annoyance at the Power Division for not providing copies of the agreement between KE and GoP.

Additional Secretary Power said that KE’s Sale Purchase Agreement (SPA) is with the Privatisation Commission not the Power Division. However, the copy of Power Purchase Agreement (PPA) that expired in 2015 is with the Power Division.

The Committee Members appeared confused about the difference between Sale Purchase Agreement and Power Purchase Agreement.

Chairman Standing Committee claimed that Power Division is not cooperating with the Standing Committee on the provision of agreement with KE, adding that perhaps all the stakeholders do not want the committee to enquire about KE.

CEO KE informed the Committee that PPA is with the power utility but not the SPA. Additional Secretary also stated that PPA is available with the Power Division but SPA is with Privatisation Commission.

At this Chairman Standing Committee advised not to use the law of the jungle. “We will get details of all the agreements including KE and IPPs,” he continued.

During discussion, it was noted that all is not above board with respect to the newly appointed BoDs of Discos as several members including Hesco Board’s Chairman is on multiple Boards. The Standing Committee also sought details of Boards of power Distribution Companies (Discos).

The Committee also sought details of deaths along with compensation to Discos’ staff and general public in different companies during the last one year.

Copyright Business Recorder, 2021