ISLAMABAD: The Senate Standing Committee on Power is set to initiate a comprehensive investigation into the agreements of Independent Power Producers (IPPs), scrutinizing their rate of return, capacity payments, and other contractual terms. The chairman of the committee, Mohsin Aziz, emphasized that the current structure of IPP agreements is unsustainable for Pakistan.
The investigation coincides with growing opposition from former caretaker minister for commerce, Gohar Ejaz, the All Pakistan Textile Mills Association (APTMA), and the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) against IPP contracts. Ejaz highlighted the burden of Rs24 per unit capacity payment charges in electricity bills, advocating for the cancellation of IPP agreements in favor of cheaper energy sources to alleviate the financial strain on consumers.
The committee has requested a detailed briefing from the Power Division Secretary covering several key points: the specifics of current IPP agreements, the status of commissioned Transmission Line Projects (TLPs), the operational status and capacity of IPPs, details of upcoming power generation projects, alternative renewable energy projects under the China-Pakistan Economic Corridor (CPEC), and the maximum generation capacity of IPPs during peak hours.
Aziz underscored the importance of scrutinizing the total investment, return on investment, and capacity charges associated with non-functional or partially operational IPPs. The committee aims to identify any discrepancies or shortcomings in the IPP contracts, assess the justification for sovereign guarantees, and evaluate the efficiency levels of IPPs.
The probe will also consider the government’s stance on new power projects and the country’s total Maximum Demand Indicator (MDI) for electricity. Aziz highlighted the critical impact of electricity prices and load shedding on various economic sectors, emphasizing the need for competitive energy solutions.
To ensure thorough oversight, the committee may form a sub-committee to continuously gather information and update the main committee. The outcome of this investigation could lead to significant reforms in Pakistan’s energy sector, addressing the financial challenges posed by existing IPP agreements.
Story by Mushtaq Ghumman
