ISLAMABAD: The Special Assistant of Prime Minister for Energy Sector Muhammad Ali has claimed that more than 27 percent returns are being paid to the Independent Power Plants (IPPs), established through Power Policy 2002.
While apprising to the Senate Standing Committee on Power, Muhammad Ali said that the government had agreed with the IPPs to pay huge returns around 15 percent in USD term on debt to the plants which was established through 1994 and 2002 Policy.
He said the rate of returns was almost same with the countries like Pakistan. He pointed out that the government had also agreed to pay on equity of investment to the IPPs which were not justified. These decisions brought the return rate for IPPs more than 27 percent.
While pointing out another flaws in the policy 2002, Mr. Ali added that the return was agreed without checking of heat rate of the power plants. The IPPs was also enjoying more unlimited profits due to non checking of heat rate of the plants. The IPPs got stay order from court when the NEPRA authority tried to conduct audit of heat rate of these power plants
Mr. Ali further told the committee that govt has to come out from the business as the issues of Power sector will not solve until the government don’t quite itself from business. While giving way forward, he said that the some countries have established power markets to run the power sector.
Read Also: 10 IPPs Urge PM to End Sovereign Contracts Over Unfair Terms
He said that Pakistan government is single buyer of electricity. This model should be changed. There should be established different power markets where the DISCOWS and big consumers can buy power to get ride from the capacity payments and promote Take and Pay system.
Th SAPM further apprised the committee the returns should be paid in local currency instead of USD to make power sector viable.
Muhammad Ali is also Head of the Task Force which was engaged with IPPs. While briefing on the performance of the Task Force, he said that the Task Force will complete its work within 6 months. The Task Force had completed negotiations with five IPPs. The government will not pay future payments to these IPPs which were due under the agreements. He anticipates that the consumers will get benefit of Rs200 to Rs300 billion after the completion of the negotiations.
On Baggase, He said that the Task Force and IPPs have agreed to delink the rate of baggase from USD and Coal. We have recommended Cabinet to allow pay baggase power plants in local currency instead of USD.
