Senate body seeks copies of IPP agreements

ISLAMABAD: Senate Standing Committee on Power has sought copies of Independent Power Producers (IPPs) agreements since 1994, names of sponsors, changes made in pacts from time to time, heat rate and price at which other regional countries entered into agreements with private power producers at that time.

The Committee headed by Senator Mohsin Aziz, held its maiden meeting on July 12, 2024, but its approved minutes were issued on August 1, 2024. Power Division is to share requisite information with the Committee Secretariat prior to next meeting of the Committee.

The sources said, next meeting of the Committee was scheduled twice, but was cancelled due to unavoidable circumstances. Another reason was that the Committee Secretariat did not issue approved minutes.

IPP agreements main reason behind power challenges: PBF

The Chairman stated that keeping in view the current energy crisis in the country regarding load-shedding of electricity, excessive billing, and high rate of tariff, theft of electricity, huge idle capacity payments, line losses and overall mismanagement in power sector has made the lives of common people miserable.

He contended that power sector has become a matter of national security and emergency. Electricity is one of the basic needs in current times but due to its high rates it has become unaffordable for the common man which is increasing frustration amongst the masses. “Even the middle and upper middle class is unable to afford the prices of electricity. If we talk of industry, it has become incompatible in the local and global market due to high rates of electricity which is also a matter of serious concern,” Chairman Committee added. Senator, Mohsin Aziz stated that the Committee would remain focused on the agreements of private sector IPPs as the unfavourable terms of those agreements are hurting people of Pakistan massively.

“We will continuously look into IPPs and if required, we will constitute a sub-committee for that. I have no vested interest and my priority would be to run the Committee with consensus and mutual respect,” he added.

Senator Shibli Faraz pointed out the non-appointment of regular MD NTDC. The Minister stated that the process of appointment is lingering on due to some court cases but the appointment would be made within a month. The Minister admitted that NTDC is the weakest link in the power sector which needs restructuring and on the directions of the Prime Minister a report is being finalized to divide the planning and operations/maintenance parts of NTDC.

The Minister for Power stated that the Ministry has identified as many as 23 fault lines of power sector which will be shared with the Committee along with the way forward. He admitted that as a nation, Pakistan did not plan better as far as demand of power is concerned. The governments created a capacity foreseeing electricity demand which unfortunately could not materialize.

“We established system of 40000 MW but our demand during winters was within the range of 8000-12000 MW,” he said adding rupee devaluation is also a major factor in increase in capacity payments.

Senator Shibli Faraz was of the view that there was lack of planning in the past which needs to be rectified otherwise power sector will go no-where and will become a disaster for the nation. He further said that pension fund and power sector are two main issues of the country which is sinking the nation so it is high time to seriously look into these issues to get the nation out of it.

Chairman pointed out that when there is an interruption in supply of electricity the demand of an industry suddenly spikes due to the reason that the plant was shut and now after restoring of electricity supply suddenly it rises as the whole plant is to be activated which spikes the MDI of a particular consumer; and the distribution company then calculates its MDI on the rate spiked due to interruption in power supply.

Secretary Power admitted that it is a valid point which will be looked into and a solution or formula will be presented to the Committee on this particular point raised by the Chairman.

After detailed discussion, the Committee directed that information on following points may be compiled and be provided to the Committee: (i) copies of the original agreements with the IPPs established in the year 1992 and later on along with the details of price per KW for each plant with comparative analysis of price of similar plants i.e. cost of the generator and ancillaries, established during those times in the region especially in the developing countries;(ii) details of the rates at which the energy was purchased by other developing countries at that time;(iii) details of capacity payments made to the power plants during the last twenty years with particular reference to the reasons for such payments either due to inability to provide evacuation or due to temporary fault in feeder evacuation;(iv) details of technical faults in power plants occurred during the last twenty years;(v) detail of sponsors of each power plant established in the country in private sector ; (vi) copies of the agreements of wind power plants established during last six years with the details of their rates and the cost at which such plants had been established;(vii) details of the current agreements with the IPPs with all the track changes in the agreements during different periods of time and the details of RoI/RoE of each project;(viii) summary of Power Policies remained in force over different periods of time may be shared with the Committee ; and (ix) details of the heat efficiency of the plants installed by IPPs, current efficiency level of IPPs, efficiency at the time of establishment and best efficiency level of such plants globally.

Copyright Business Recorder, 2024