ISLAMABAD, Pakistan: The National Assembly was told on Thursday that the existing Power Purchase Agreements allow the Independent Power Producers (IPPs) to recover its fixed costs including the debt servicing through Capacity Purchase Price which is absolutely on the basis of availability of plant for generation.
Replying to a question related to agreements with IPPs which are putting a heavy burden on consumers, the Minister for Energy (Power Division) Sardar Awais Ahmad Khan Leghari apprised the House that the Energy Purchase Price is received by the IPPs to recover fuel cost at the rate at which they procure fuel.
Moreover, variable Operation and Maintenance (O&M) cost is linked with actual generation. As a result of devaluation of PKR, Capacity and Energy Payments are substantially increasing, putting a burden on the consumers.
About the steps being taken by the government in this regard, the House was told that the Prime Minister has constituted a Task Force to identify and oversee implementation of structural reforms in the power sector of Pakistan, with a view to reduce electricity tariff for the consumers as well the financial burden of the sector borne by the federal government.
Further, it is also mandated to establishment of an efficient, liquid and self-sustaining competitive market.
Regarding the dates on which agreements with IPPs were reviewed, the minister told that Terms and Conditions of Agreements with different IPPs have been reviewed from time to time. However, latest negotiations with IPPs were conducted in February 2021.
The following are the payments made to each plant under the head of capacity charges as per agreement?;
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