This comes amid reports that the government of Pakistan has “over the past decade bought 26 Independent Power Producers (IPPs) using gas, regasified liquefied natural gas (RLNG), and residual furnace oil (RFO) to produce around 1 trillion in capacity payments. Media reports since 2015 said on Saturday that Pakistan is reviewing existing and upcoming power projects, including hydro, in response to concerns over energy capacity and pricing. power and nuclear plants, due to which IPPs are facing financial pressure including high capacity payments for unused electricity.
The purpose of the review is to assess the feasibility and efficiency of these power projects as the country faces additional energy production, to match current demand and ensure economic stability, newspaper The News International said. The need to improve production was emphasized, said the newspaper The News International.
According to a Business Recorder report, the development comes amid reports that the government of Pakistan has “reportedly awarded 26 Independent Power Producers (IPPs) with gas, regasified liquefied natural gas (RLNG), and residual furnace oil.” Operators have made capacity payments of around Rs 1 trillion. – Based (RFO) over the last decade, starting in 2015.
The News International quoted the Minister of Power Awais Leghari as saying that in a meeting of the Senate Standing Committee on Power chaired by Senator Mohsin Aziz on Friday.
We are also reviewing the committed projects, even Bhasha Dam and C5, for which we are committed and have already issued letters of support. The C5 project refers to the 1,200 MegaWatt Chashma Nuclear Power Plant Unit 5, while the Diamer Bhasha Dam under construction on the Indus River will irrigate 1.23 million acres of land and generate 4,500 MegaWatt of electricity annually.
Awais Leghari added that a task force is currently reviewing the IPPs, and said he expects to provide the Senate Standing Committee with a detailed outcome and a realistic timeframe within the next couple of weeks, the newspaper said.
Another media portal Profit said the minister also warned that any hasty or unilateral action against IPPs could result in severe financial losses, citing past experiences such as the Rekodic case, where Pakistan was charged against the agreement. Violations faced significant fines, another media portal Profit said.
Under the Integrated Generation Capacity Expansion Plan (IGCEP), about 18,000 MegaWatt of new capacity is expected over the next 10 years, the majority of which will be from hydropower.
But we are also challenging them. We want to move towards the minimum cost,” Laghari said, adding that these IPP contracts are subject to sovereign guarantees, making unilateral changes difficult.
According to Pakistan Economic Survey 2024, the installed power generation capacity for FY 2024 is 42,131 MW.
Expressing concern over IPPs’ contracts, which it termed as poor and overpriced, the panel asked the power division to provide regional comparisons, heat audits, and return on equity (RoIs) of the projects to power consumers.
Several important issues related to IPPs were discussed in the meeting. The committee has sought copies of all agreements entered into with IPPs since 1992.
The newspaper said it asked these IPPs for a briefing on the cost per unit of electricity production, as well as a comparison of these costs with those of other regional countries.