Senate Committee on Power Discusses IPP Investments and Tariff Reforms at Islamabad Meeting.

Islamabad: Senator Mohsin Aziz, Chairman of the Senate Standing Committee on Power, led a meeting at the Old PIPS Hall, Parliament Lodges, focusing on the report concerning Independent Power Producers (IPPs) released in 2020. The discussion centered on the financial returns from IPP investments and potential reforms in the power sector.

According to Senate of Pakistan, the meeting revealed that investments by IPPs in power plants were recouped within two to four years, with coal power plant investments redeemed in just two years. Special Assistant to the Prime Minister (SAPM) on Power, Muhammad Ali, highlighted that returns in Pakistan ranged from 13 to 17 percent, significantly higher than those in other countries. He suggested that the government should withdraw from the power business and instead concentrate on developing power markets, aligning with international practices.

Senator Aziz emphasized the need to transition from a dollar-based regime to a rupee-based system to provide relief to the public. SAPM Muhammad Ali informed the committee about the termination of five power plants, following NTDC’s recommendations, which would save the country Rs. 60 billion annually. Negotiations with IPPs regarding the payment of the saved amount back to the government were also discussed.

The committee also addressed the issue of delinking bagasse from international coal prices, recognizing it as a local raw material. Muhammad Ali noted that the task force successfully converted this into a rupee-based system and had sent a summary for Cabinet approval. Further negotiations with 18 IPPs from 1994 and 2002, as well as government power plants, are planned for the next phase, expected to conclude in three to six months. Senator Aziz acknowledged the task force’s efforts, stating that successful negotiations would alleviate the public’s burden.

An additional point of discussion was raised by Senator Aimal Wali Khan regarding the inclusion of IPP fees in electricity bills by PESCO in Khyber Pakhtunkhwa, despite no electricity being produced by IPPs in the province. Special Secretary Arshad Majeed Mohmand clarified that the federal government determines electricity prices and maintains a uniform tariff rate nationwide. The committee suggested that provinces should benefit from their indigenous resources.

The meeting was attended by Senators Taj Haider, Syed Kazim Ali Shah, Rahat Jamali, Haji Hidayatullah Khan, SAPM on Power Muhammad Ali, Special Secretary for Power Arshad Majeed Mohmand, and other senior officials from relevant departments.

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