ISLAMABAD: The Central Power Purchasing Agency-Guaranteed (CPPA-G) is set to propose a Rs 1 per unit reduction in fuel charges for bagasse-fired Independent Power Producers (IPPs), following newly finalized agreements with owners of eight IPPs, informed sources disclosed.
The proposal will be presented during the Fuel Charges Adjustment (FCA) public hearing for Distribution Companies scheduled for October 30, 2024. According to an insider, “The CPPA-G will suggest a Rs 1 per unit decrease in generation costs from bagasse IPPs, to be applied retrospectively, which would bring the negative FCA adjustment for September 2024 to over Rs 1 per unit.”
The revised price of bagasse has been adjusted to Rs 4,500 per ton from Rs 5,600 per ton, with a 5% retrospective deduction on the revised bagasse cost, resulting in a projected 42% reduction in allowed tariff-related expenses.
Initially, NEPRA approved a 110% increase in the tariff for bagasse-based power, linking it to international coal prices. However, a deal struck by the Energy Task Force with the eight IPPs—including one owned by the Prime Minister’s son—aims to achieve an overall saving of Rs 80-100 billion.
During a recent Senate Standing Committee meeting, discussions centered around delinking bagasse from coal prices. Senator Mohsin Aziz and NEPRA officials discussed challenges in determining bagasse prices and options to establish a sustainable pricing framework similar to India’s model.
Story by Mushtaq Ghumman
