Minister for Power Omar Ayub Khan Monday hinted at review of previous Power Purchase Agreements (PPAs) signed with Independent Power Producers (IPPs), without naming projects established under China Pakistan Economic Corridor (CPEC).
He offered these comments in his speech at the "Energy Week" organized by the National Electric Power Regulatory Authority (Nepra). The Minister was of the view that consumers will have to pay higher capacity payments.
Power Minister, who has already given IPPs' contracts review task to a committee headed by former Chairman SECP, Muhammad Ali, did not share the details of IPPs he was referring to, but the Chinese ambassador sitting next to the Minister on the stage was taking notes of the Minister's remarks.
"Power Purchase Agreements (PPAs) signed in the past and PPAs signed with IPPs have to be looked at," said the Minister.
However, as the Minister was leaving after delivering his speech this correspondent asked him whether PPAs of power projects established under CPEC will also be reviewed, and he replied "rely on whatever words I used in my speech."
Omar Ayub Khan said the country has great potential for investment in energy sector, and companies are looking to invest in Pakistan. He said artificial intelligence and latest technology are being introduced in energy sector for optimal exploitation of the sector. The Minister said we have to be up to date and be faster, better and cheaper in respect of energy production. He said the government is focusing on renewable energy and a new power policy is being prepared. Omar Ayub said the government is aiming to produce 75 percent energy through indigenous resources. He said, the cost of renewable energy has come down by 4.5 or 4.6 cents per unit.
He said, the consumer does not care where the energy comes from as he/she wants it to be available at the flip of a switch.
The Minister stated that when consumers are forced to pay a high price then there is pressure on the government and industry starts to complain of high input costs making them uncompetitive in the world market. This has raised the issue of energy mix; 75 per cent electricity being consumed today in Pakistan is from imported fuel one way or the other. Pakistan spends billions of dollars on import of fuel, which widens current account deficit and puts pressure on the rupee.
The Minister said the government is focusing on renewable energy and a new power policy is being prepared.
"We are focusing on PPAs and generation of energy through renewable sources. About 60 percent of energy will be renewable energy by 2030," he added.
The Minister further stated that new and modern technology is being introduced in the power sector as the old technology is now obsolete.
Omar Ayub pointed out the energy sector of Pakistan offers investment opportunities of one hundred billion dollars, including forty five billion dollars in power generation, twenty billion dollars in transmission and fifteen to twenty billion dollars in distribution.
He said Pakistan is a large market for all the industries of the world to come and invest in. He said Pakistan is an open market with high rates of return. We are also removing barriers to entry.
Omar Ayub expressed satisfaction that several companies are evincing an interest in relocating their manufacturing facilities in the production of wind turbines and solar panels to Pakistan.
Nepra Chairman Tauseef H Siddiqui said accepting the challenge of Nepra was not an easy task for him, and the reason was the power sector's current situation with Pakistan's circular debt of Rs 1.9 trillion, in addition to lots of other lacunas facing the sector.
"I decided to change Nepra from its role as a passive organization to an active organization to play proactive role as a regulator," he said adding hat different organisations were working in isolation and the first thing he did was to ensure that all are working together and producing a very melodious beat.
Chairman Nepra further stated that he wanted result oriented industry. Nepra's role is primarily divergent in one sense as it has to take care of investment in the country and interest of the consumers. He said after joining the Nepra he decided to bring all the stakeholders on one platform for knowledge sharing and wisdom. He thought that one day he would be called by the highest office for an independent view on energy sector issues and their solution.
He further stated that the purpose of Energy Week was to formulate recommendations on the issues of power sector on the basis of collective wisdom of stakeholders.
When the Minister was asked why he did not challenge the circular debt figure of Rs 1.9 trillion given by Chairman Nepra, he said, he gave this figure after including the payables of PHPL.
Chinese ambassador to Pakistan Yao Jing said despite the challenge posed by corona virus, China is determined to take forward the multi billion dollars China Pakistan Economic Corridor (CPEC) projects. He said projects under CPEC will not be affected by this temporary challenge.
The Ambassador said the next stage of the CPEC cooperation will focus on diverse sectors including industrial, agriculture, science and technology and renewable energy and hydro power. He was confident that this will give a new momentum to the future development of Pakistan's economy.
Appreciating the structural reforms being introduced by the present government, he said under the leadership of Prime Minister Imran Khan, the energy sector of Pakistan is undergoing a transformation focused on providing affordable and reliable energy.
Yao Jing said that significant change has been witnessed in power sector during the incumbent government. He said efforts for improvement in power sector are appreciated. However, it will take some time and maintained that investment under CPEC is in the interest of Pakistan. He said, Pakistan is doing institutional reforms and CPEC is the basis for China Pakistan framework. CPEC will open new vistas of cooperation between the two countries.
CPEC Authority Chairman Lt General Asim Saleem Bajwa (retired) stated that CEPC is a reality which will be taken ahead. He said, work on the western front is speedily ongoing; adding that energy sector projects of the first phase have already been completed, and all CPEC projects will be completed as per schedule. He further stated that there will be no specific impact of corona virus on CPEC projects, adding that steps are being taken to benefit Thar coal.
General Asim Saleem Bajwa said that after the completion of first phase of CPEC, second phase would be initiated. The benefits of first phase will start coming from middle of this year. In the second phase focus will be on industry, agriculture and science and technology.
Chairman Water and Power Development Authority (Wapda), Lt General, Muzzammil Hussain (retired) said that by the end of 2007, Ministry took drastic decision to un-bundle Wapda and different entities were created including NTDC. He also referred to the circumstances of establishment of IPPs and also different figures of circular debt.
He said, focus is being given to hydro politics across the world which is very important for Pakistan. Chairman Wapda said that 4,600 MW hydel electricity will be added to the system, adding that hydel generation will be 16,000 MW by 2030. He also shared details of hydropower projects to be completed by 2050.
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