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The National Assembly’s Standing Committee on Power was informed that the government has discontinued capacity payments to 22 Independent Power Producers (IPPs). This decision is expected to result in an overall saving of Rs 1500 billion, providing consumers with relief of Rs. 4 to 5 per unit.
The meeting of the Standing Committee on Power was held under the chairmanship of Muhammad Idris.
During the meeting, the Power Secretary briefed the committee on the latest developments, stating that capacity payments to 14 oil-based and 8 bagasse-based IPPs had been halted.
He further noted that efforts were underway to discontinue payments to additional IPPs, with the objective of achieving substantial financial savings and reducing electricity costs for consumers.
During the discussion, Mustafa Kamal raised concerns, highlighting that some IPPs claimed their contracts were forcibly terminated. In response, the Power Secretary clarified that certain IPPs had violated their agreements, and these breaches had been duly communicated to them.
He stated that the government’s teams had provided concrete evidence of these infractions, leaving the IPPs with two options: either to accept the decision or to undergo a financial audit by the National Electric Power Regulatory Authority (NEPRA).
The Power Secretary further revealed that while most IPPs complied, two refused to accept the decision, prompting the government to direct NEPRA to conduct an audit. Consequently, NEPRA has now issued public notices regarding the audits of these non-compliant IPPs.
The meeting also addressed concerns raised in the Power Division’s report regarding an additional burden of 7.8 million extra units on LESCO consumers. The committee took this matter seriously and subsequently formed a subcommittee to investigate the issue further.
Expressing his frustration, committee member Rana Muhammad Hayat remarked that over the past three to four years, electricity bills and WAPDA’s expenses had continuously increased. He questioned how the government would justify these rising costs to the public, demanding clarity on when consumers would receive relief instead of being burdened with higher charges. He also emphasized the importance of informing the public about the potential reduction in electricity costs through the use of locally sourced coal.
In response, officials from the Power Division explained that electricity generated from local coal costs Rs. 4 per unit, whereas electricity produced from imported coal costs Rs. 16 per unit. Additionally, they pointed out that electricity generated using furnace oil costs between Rs. 30 to 32 per unit, making it the most expensive option.
Mustafa Kamal then posed a critical question regarding the future energy strategy, asking what the long-term plan would be if hydropower and thermal power plants were phased out in favor of coal-based energy. He also inquired about the government’s contingency measures in case coal-based power plants faced operational challenges in the future.
Addressing these concerns, the Power Secretary assured the committee that coal-based power plants could be established within a short period. He further stated that the government was conducting advanced forecasting for the next decade to ensure energy stability. He also mentioned that, over the next three years, many power plants currently operating on furnace oil would be gradually shut down as part of the country’s energy transition plan.
