RoI, capacity payments and other terms: Senate panel may initiate probe into IPP pacts

ISLAMABAD: The Senate Standing Committee on Power is likely to initiate a probe into the agreements of the Independent Power Producers (IPPs) along with their rate of return, capacity payments, and other terms and conditions as according to the chairman Standing Committee, the IPPs and Pakistan cannot co-exist anymore.

It is a coincidence that the committee has taken up the pacts of IPPs and Transmission Line Projects (TLPs) at a time when former caretaker minister for commerce, Gohar Ejaz and All Pakistan Textile Mills Association (APTMA) and the FPCCI are up in arms against IPPs pacts.

“Rs24 per unit in our electricity bills are capacity payment charges of IPP which will continue to increase. We are sinking under these present Rs2 trillion capacity payment charges of shut or partially operational IPPs.

Govt should cancel all agreements with IPPs, says FPCCI leader

Only way forward to cancel IPPs agreements and buy electricity from cheapest from cheapest sources to give relief to domestic, commercial and industrial consumers,“ said Ejaz, on X (formally known as Twitter).

In the past, the top brass of IPPs was seen as saying that the previous probe was ordered on the complaint of Gohar Ejaz during a function also attended by the then Army Chief, General Qamar Javed Bajwa and the ISI Chief, Faiz Hameed.

The committee has asked the secretary Power Division to give a detailed briefing on the following points pertaining IPPs/TLPs;(i) the details of current IPP agreements with terms and conditions of the agreements;(ii) the details of commissioned TLPs;(iii) how many commissioned IPPs are currently functioning in Pakistan with details of their gross/installed capacity, operational status and fuel sources/technology;(iv) the details of upcoming power generation projects under construction and under consideration of the government;(iv) the detail of power generation projects, alternative renewable energy projects under the China- Pakistan Economic Corridor (CPEC) regime; and (v) IPP-wise detail of maximum generation in peak hours in comparison with their actual installed capacity.

“The subject of IPPs is very close to my heart. I may bring this issue in the Senate that Pakistan and IPPs cannot co-exist anymore. I don’t want to take the name of any party (political) on this issue. We will be discussing that era and the year when these things were done,” he added.

Mohsin Aziz was of the view that the committee will look into IPPs’ contracts with an open heart which include total investment, return on investment, capacity charges of dysfunctional or partial functioning and the IPP is getting capacity payment in connivance with the government’s entities.

The committee will also look into discrepancies/shortcomings in the IPPs pacts if any, and justification of sovereign guarantees including project cost and promised rate of return and current return, he added.

According to the chairman Standing Committee, the committee would also inquiry that what is the current efficiency level of IPPs, what was their efficiency at the time of establishment and what is the best efficiency level of such plants globally.

He said the committee would also seek the viewpoint of the government on new such projects and the country’s total Maximum Demand Indicator (MDI) of electricity.

“Load shedding, electricity price is on one side whereas poor, middle class or industrialists, who have to make their products competitive if they want to survive, are affected and that’s why I have this issue as top agenda,” he maintained.

Mohsin said the committee would continue to repeat this matter and if there would be any need, a Sub-Committee would be constituted to get information and update the main Committee continually.

Copyright Business Recorder, 2024