Islamabad:
The review of the agreements with independent energy producers (IPP) has resulted in Savings for life of RS1.3 billion, since the government works to convey these savings to consumers, the power division revealed on Tuesday.
Electricity consumers have been paying RS2.5 to 2.8 billion annual to IPP as capacity payments. Some of these IPP have been receiving payments without producing a single electricity unit due to defective agreements made in the past.
To address this problem, the current government decided to renegotiate agreements with IPP to reduce capacity payments. This review has so far led to a reduction of RS7 per unit in electric tariffs. The government is still in the process of ensuring that this benefit reaches consumers, said Power’s division.
In a recent meeting of the Cabinet, the Minister of Energy, Sardar Awais Ahmad Khan Leghari, presented a review of government policies, both undertaken and planned, to improve the efficiency of the electricity sector.
The key measures included the reduction of tariffs at RS4.96 nationwide during the last eight months, the renegotiation of tariffs with 14 IPP and eight IPP based on bagbas to ensure savings for life of RS1,333 billion and policies aimed at stimulation of demand.
The minister also described the planned reforms of the electricity sector, such as the conversion of imported electric power plants based on coal on Thar coal, the development of an integrated system plan, the rationalization of net measurement and the reduction of national circular debt.
He highlighted the progress in the solarization of Tubewells in Baluchistan, stating that of 27,000 tubewells, 4,000 had already become, which resulted in savings of approximately RS1 billion due to losses in the electricity sector in the province.
The minister also detailed the steps taken by the Government to reduce inefficiencies in distribution companies (disc) and explained that policies had been implemented to improve the sector’s governance by improving the efficiency of transmission and distribution.
According to a reviewed agreement, it was learned that 14 IPP had agreed to the new terms and conditions of the agreements, including the return of excess profits for the sum of RS31 billion, compared to the initial claims of RS55 billion and renounced claims for late payment interest (LPI) for pending quantities.
On the other hand, the Government agreed to close ongoing investigations by the National Office of Responsibility (NAB) and the National Electric Power Regulation (NEPRA) Authority against certain IPP.
The possible buyers of the UPL and the UPL-II had agreed to renounce their claim of accounts receivable LPI worth RS62.5 billion with the condition that the Government would facilitate the exemption of LPI’s claim for the Petroleum and Gas Development Company Limited (OGDCL) of UPL and UPL-II, which amounts to RS46 billion.
Similarly, five IPP in the Sui Northern Gaseline Limited (SNGPL) network had also resigned from their accounts receivable LPIs that amounted to 4.6 billion with the condition that the government would face the exemption of SNGPL LPI claims that amounted to RS1.9 billion for IPP.
