Cabinet Committee on Energy extends negotiations with hydel and gas based IPPs for tariff reduction

A separate case is being prepared for hydel and gas IPPs who have not signed the MoU 

ISLAMABAD: The Cabinet Committee on Energy (CCoE) has extended the mandate of the five-member committee to engage with hydel and gas based Independent Power Producers (IPPs) in order to ensure reduction in their tariff, it was reliably learnt on Tuesday.

The move is part of the caretaker federal government’s concerted efforts to address escalating electricity prices and providing relief to consumers grappling with exorbitant power tariffs. The decision was made during a meeting of the CCoE which was held on 26th January 2024 where the Power Division submitted a summary titled “Continuing negotiations with Independent Power Producers (IPPs)”.

Previously, the CCoE had considered a summary from the power division titled “Implementation of Master Agreements and PPA amendments with Wind Power Producers (WPPs) dated 25th May, 2023.” In response, the CCoE directed the power division to devise a new strategy for continued engagement with 14 wind power producers (WPPs), with the objective of achieving savings for consumers and cost reduction.

According to sources, to implement the decision of CCoE, the Power Division notified a committee consisting of key members, including the Managing Director of the Private Power and Infrastructure Board (PPIB) as the convener, the CEO of CPPA, Joint Secretary (PF) from Power Division, Joint Secretary from Law & Justice Division, and a representative from the Finance Division.

During the course of CCoE which was held on 26th January 2024, the Power Division further informed that M/s Chiniot Power Limited, an Independent Power Producer based on bagasse, had previously not agreed to convert its Memorandum of Understanding (MoU) into a building agreement during the negotiations in 2020-21. However, the company has now expressed its intentions to negotiate and initiate discussions with the Central Power Purchasing Agency (CPPA) to resolve disputes, as conveyed in a letter dated January 1, 2024. The Power Division proposed that the committee engaged with Wind Power Producers could also consider negotiating with M/s Chiniot Power Limited to evaluate the company’s proposal and place its recommendations for the consideration of the CCoE.

It is relevant to note that earlier, Memoranda of Understanding (MoUs) were signed with 47 IPPs as a consequence of negotiations during 2020. After a series of negotiations, the then implementation committee succeeded to convert 46 MoUs into initialled agreements as a report for approval by CCoE. Out of these 46 IPPs, binding agreements with 32 IPPs (20 thermal IPPs, 7 bagasse IPPs), 3 wind power producers (WPPs) and 2 solar IPPs were executed and payments were made after due approval by CCoE and ECC. CCoE authorised the power division to devise a new strategy to continue engaging with 14 wind power producers.

As per the sources, during the discussion in the meeting of CCoE, it was observed that the scope of the negotiations should not be restricted to WPPs or bagasse based power plants only as per proposal in summary but remaining hydel and gas based IPPs may also be engaged. It was further observed that since the summary carried a proposal for extending the scope to remaining bagasse based IPPs, therefore, a separate summary would be required for the purpose rather than adding the scope of hydel and other IPPs in the instant summary. The forum (CCoE) agreed to it and also directed the power division to initiate a separate case for engaging with remaining IPPs, including those dealing with hydel power, which did not sign MoUs.

Ahmad Ahmadani
Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected].



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