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Energy Minister Awais Leghari has reiterated that there was never any intention to impose a tax on solar energy, nor will there be in the future. He also indicated that electricity prices could see further reductions and assured that even feeders prone to electricity theft would receive power during Sehri and Iftar in Ramadan.
These remarks were made during a meeting of the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz. Special Assistant to the Prime Minister on Power, Muhammad Ali, provided a comprehensive briefing, informing attendees that negotiations with Independent Power Producers (IPPs) were ongoing, with agreements for six plants already terminated. He further stated that power plants established under the 2002 policy would now be paid in local currency instead of dollars, with reduced profit margins, and would only receive capacity payments based on their actual generation capacity.
The briefing also highlighted that discussions were underway to lower the tariffs of power plants owned by both federal and provincial governments. Additionally, negotiations were in progress with 45 wind and solar power plants to transition them to a “take-and-pay” model. Muhammad Ali revealed that overpayments to gas and furnace oil-based power plants had been recovered, and efforts were being made to eliminate circular debt. The government, he explained, was working towards waiving interest on circular debt, while the remaining amount would be settled through fixed-cost bank loans.
Providing further details, Muhammad Ali stated that the terminated power plants had five to ten years remaining on their contracts. The exchange rate for IPP payments had been fixed at Rs168 per dollar, the same as during the previous administration, despite the current rate standing at Rs 278 per dollar. He explained that instead of conducting a time-consuming forensic audit of IPPs, the government opted for renegotiations through mutual consultation.
He also disclosed that Rs 35 billion had been recovered from IPPs as excess fuel payments, while agreements with six IPPs had already been terminated. The government was actively working on eliminating circular debt by securing fixed-rate bank loans. Rejecting claims of coercion, he emphasized that all modifications to agreements with IPPs were made through mutual understanding.
Discussing financial inefficiencies, Muhammad Ali revealed that several non-operational power plants were receiving annual payments of Rs 70 to 80 billion, with Hubco alone being paid Rs 30 billion per year. Meanwhile, the federal cabinet had recently approved new agreements with 15 additional IPPs, expected to save the national treasury over Rs 500 billion and reduce electricity tariffs by Rs 10 to 11 per unit.
He further revealed that the previous government had been requested to allocate 20 million rupees for a forensic audit of IPPs, but the funds were never provided. As a result, the government opted for negotiations instead. However, he clarified that IPPs unwilling to cooperate would still be subjected to a forensic audit. He highlighted that Rs 300 billion in late payment surcharges had been waived in the power sector and that Rs 35 billion in excess payments had been successfully recovered from IPPs.
During the session, Senator Shibli Faraz commented that even the National Accountability Bureau (NAB) was engaged in recoveries. Muhammad Ali responded by pointing out that while NAB typically settled plea bargains at 25%, the government had achieved a full 100% recovery, in addition to successfully waiving all late payment surcharges.
Energy Minister Awais Leghari reaffirmed that no coercion had been used in renegotiating agreements with IPPs, emphasizing that all modifications were made through mutual consultation. He once again clarified that there were no plans to impose a tax on solar energy, adding that the government had effectively handled the challenges associated with IPPs. Expressing confidence in further reductions in electricity prices, he also announced that uninterrupted power supply during Sehri and Iftar would be ensured, even on feeders with high electricity theft rates. He confirmed that orders for electricity availability during Ramadan would be issued immediately.
During the committee meeting, a journalist attempted to record footage, prompting Energy Minister Awais Leghari to question whether journalists were allowed to record audio and video in committee meetings according to parliamentary rules. In response, Senator Shibli Faraz remarked that if inaccurate information was reported, the Prevention of Electronic Crimes Act (PECA) was in place to address such issues.
