Federal Minister for Power Sardar Awais Ahmed Khan Leghari assured international development partners (IDPs) that negotiations with Independent Power Producers (IPPs) on power sector reforms are transparent, allowing them to walk away, seek arbitration, or opt for a forensic audit as per their agreements.
Awais Leghari gave this assurance in a meeting with development partners, led by the Country Director of the World Bank, Najy Benhassine, and attended by representatives from the IMF, ADB, IFC, KFW, the German Embassy, FCDO, UNDP, and AIIB.
The federal minister apprised the participants about the reforms undertaken by the Power Division to enhance efficiency and discipline, with the objective of making electricity prices more competitive and affordable for all consumers, particularly for the industry.
The minister, while underscoring the importance of efforts to rationalize electricity tariffs for the country’s economy, assured the participants that all negotiations with IPPs are being conducted in a free, fair, and transparent manner, with the right of parties to withdraw, seek arbitration, or opt for forensic audits as per their agreements.
He said that the government is taking all steps to engage its development partners and has adopted an inclusive approach in policy formulation and execution.
He added that, due to strict transparency measures, the government has successfully removed around 7,000 MW from the Indicative Generation Capacity Expansion Plan (IGCEP), reducing the total committed capacity from 17,000 MW, thereby saving a substantial amount of money on expensive power generation.
Awais Leghari briefed the participants about key reforms introduced by the Power Division, including the transition from a “Take or Pay” model to a “Take and Pay” system, the elimination of furnace oil-based plants, and the conversion of imported coal-based plants to local coal.
He said that an extensive and detailed study of power generation has revealed that past policies did not prioritize the least-cost model, but this approach will now be adopted moving forward.
He also provided updates on the removal of transmission constraints through the construction of Matiari-Moro-RYK lines, Ghazi Barotha-Faisalabad lines, installation of reactive power compensation devices, and battery storage systems.
Additionally, he highlighted the planned splitting of NTDC into the Energy Infrastructure and Development Company and the National Grid Company, as well as the provision of electricity to Special Economic Zones (SEZs) by developing a regulatory and contractual framework.
The minister discussed Service Level Agreements (SLAs) with industries that operate captive power generation, the installation of Advanced Metering Infrastructure (AMI), and the implementation of an Asset Protection Management System (APMS) on all feeders.
Regarding the elimination of circular debt, the minister stated that the government aims to clear it within the next five to eight years. Additionally, the rationalization of electricity duties and subsidies is another step toward achieving a balanced electricity tariff structure.
He added that adjustments to the net metering policy are under consideration, as it currently imposes a Rs150 billion burden on other consumers.
He informed the participants that inducing incremental demand through marginal pricing and introducing long-term pricing packages are essential for long-term planning, as unused surplus power continues to add capacity charges.
He also reiterated the government’s decision to halt the purchase of additional power and outlined plans for establishing a competitive wholesale electricity market.
The minister further discussed the privatisation of DISCOs, improvements in their governance boards, and reforms in the Power Planning and Management Company.
