The federal government has eliminated the requirement for Fuel Supply Agreement (FSA) guarantees for new power projects, a provision previously mandated by the Private Power & Infrastructure Board (PPIB). The change was disclosed by PPIB Managing Director Shah Jahan Mirza during a public hearing convened by the National Electric Power Regulatory Authority (Nepra) regarding a proposed $250/MW fee imposed by PPIB.
According to a news report, the hearing was initiated as Nepra questioned the justification for PPIB charging consumers a fee similar to other power sector entities like CPPA-G, NTDC, and DISCOs. PPIB had been collecting this fee until Nepra halted it two years ago, causing financial strain on the board. The proposed PPIB fee would apply to 19,896 MW of installed generation capacity and 4,000 MW of transmission line capacity, with an estimated impact of 1.1 paisa per unit for one year.
If Nepra allows the recovery of a three-year backlog, the one-time impact would rise to $15.3 million (Rs 4.2 billion), equivalent to 3.3 paisa per unit, to be recovered through the Quarterly Tariff Adjustment (QTA).
PPIB Managing Director Shah Jahan Mirza outlined PPIB’s post-commercial operation role, which includes dispute resolution, security coordination, technical evaluations, and issuance of no-objection certificates (NOCs) for shareholding changes.
He also highlighted PPIB’s role in ensuring fuel availability and serving as the government’s representative in disputes raised by independent power producers (IPPs). Given the weak financial standing of DISCOs, he said PPIB continues to provide a power purchase guarantee on behalf of the government.
During the hearing, industry stakeholders questioned the rationale behind the PPIB fee. A representative from Atlas Solar sought clarification on charging fees in rupees instead of dollars, while Punjab Power Development Board (PPDB) called for an equal share in fee recovery. Some solar project representatives and Quaid-e-Azam Thermal Power Limited (QATPL) also objected to the charge.
Nepra officials, including its chairman and technical experts, raised concerns over PPIB’s functions overlapping with those of CPPA-G. Industry representatives opposed the proposal, arguing that with the transition to a competitive electricity market, PPIB’s role has become redundant. Some even suggested dissolving the board.
