Pacts revision with IPPs: Development partners informed of possible scenarios

ISLAMABAD: Federal Minister for Power, Sardar Awais Ahmed Khan Leghari on Monday said negotiations with IPPs are being held in a free, fair and transparent manner with right to walk away from these negotiations or resort to arbitration or opt for forensic audit as per the terms of their agreements.

He made this statement during a detailed session with Power Sector International Development Partners on Power Sector Reforms and the way forward.

The development partners were led by World Bank Country Director Najy Benhassine and included representatives from IMF, ADB, IFC, KFW, German Embassy, FCOD, UNDP and AIIB.

Govt saved Rs1.1 trillion through talks with IPPs: Awais Leghari

The session was held days after eight DFIs wrote a very strong-worded letter to the minister and other concerned authorities on the exploitation of renewable projects. Previously, German Ambassador also had a bad experience with respect to M/s Siemens which partnered with M/s Rouch Power.

Najy Binhassine informed Pakistan’s IDPs that its power sector is at a critical juncture with ambitious reforms under way to enhance efficiency, sustainability and financial stability.

The World Bank’s ten-year Country Partnership Framework for Pakistan which the Bank presented places significant emphasis on the energy sector, recognizing its critical role in driving economic growth.

“Given the government’s launch of a significant reform program, we believe that this is an opportune time for a high-level stocktaking discussion on power sector reforms. This will allow us to explore how we can further support the government’s vision for a more efficient, sustainable and financially viable power sector,” he added.

The federal minister apprised the participants about the reforms that the Power Division has undertaken to bring in efficiency and discipline with targets to bring the electricity prices to more competitive and affordable levels for all consumers in general and industry in particular.

The minister while underscoring the importance of efforts to rationalize tariff of electricity for the economy of the country, assured the participants that all negotiations with IPPs are being held in a free fair and transparent manner with right to walk away from these negotiations or resort to arbitration or opt for forensic audit as per the terms of their agreements.

He said that Government is taking all steps to engage all its development partners and in this regard has adopted an inclusive approach in policy formulation and execution process.

He said that due to sheer maintenance of transparency the government has been able to cut around 7,000 MW from IGCEP from a total committed 17,000 MW thus saving a huge amount of money in terms of expensive power.

Awais Leghari informed the participants about various reforms undertaken by the Power Division which include transition from Take or Pay to Take and Pay, elimination of furnace oil based plants, conversion of imported coal to local coal.

He said that extensive and detailed study of power generation reveals that we have not adopted least cost policy in the past but now it will be least cost.

He also apprised about Removal of Transmission constraints by construction of Matiari Moro RYK lines, Ghazi Barotha Faisalabad lines, Reactive Power Compensation Devices, Battery Storage system.

He further informed about the process of splitting of NTDC in Energy Infrastructure and Development company and National Grid Company, Provision of electricity to SEZs by developing regulatory and contractual framework, SLAs with industries with Captive Generation, installing AMI and APMS Assets protection management system on 100% feeders.

About elimination of circular debt, the Minister stated that the Government wants to finish it in the next five to eight years. Elimination of electricity duties, rationalization of subsidies is yet another step toward rationalization of electricity tariff. He said that rationalization of net metering is also on the cards which is adding Rs 150 billion burden for rest of the consumers.

He informed the participants that inducing incremental demand through marginal pricing, long term packages need long term planning since surplus power is not being used by anyone adding capacity charges.

He also apprised the participants about the wholesale market for electricity by adding that “we have decided that the government is not going to buy any further power.

The minister also apprised the participant about the Privatization of DISCOs, improving Governance of DISCOs Boards, and reforms at Power Planning and Management Company.

According to Power Division’s statement, the participants appreciated the reforms initiated by the Power Division and assured their support in the process.

Copyright Business Recorder, 2025