The government has completed negotiations with 14 residual furnace oil-based Independent Power Producers (IPPs) under a “take and pay” agreement, with discussions ongoing with other IPPs.
According to a news report, Prime Minister Shehbaz Sharif has announced the phased shutdown of outdated power plants to reduce electricity costs and enhance energy efficiency. The move is part of broader energy sector reforms aimed at mitigating financial strain on consumers and the economy.
The National Transmission and Dispatch Company (NTDC) has issued a revised merit order, prompting the Ministry of Energy’s task force to initiate negotiations with independent power producers (IPPs) operating on high-cost fuels such as high-speed diesel (HSD), residual furnace oil (RFO), and regasified liquefied natural gas (RLNG).
Halmore Power, operating on HSD, was identified as the most expensive IPP, generating electricity at Rs61.23 per kWh. In contrast, the Uch Power Plant, running on natural gas, had the lowest cost of Rs3.11 per kWh.
Other high-cost IPPs include Saif Power and Sapphire Electric, producing power at Rs60.8 per kWh, and Orient Power, generating at Rs60.2 per kWh. Engro PowerGen produces at Rs55.2 per kWh, while Punjab Thermal Power, using HSD, generates at Rs50 per kWh. RLNG and RFO-based plants such as Jamshoro and Muzaffargarh units also reported costs ranging from Rs46.5 to Rs39.3 per kWh.
RFO plants like Nishat Chunian and Liberty Power Tech have generation costs of Rs33.4 and Rs34.3 per kWh, respectively, while RLNG plants such as Rousch produce at Rs28.8 per kWh.
The detailed cost breakdown emphasizes the disparities in energy production costs across different fuel types and plants.
To achieve cost reductions, the government has prioritized plants operating on low-cost fuels while expediting negotiations with IPPs. The Energy Ministry has been tasked with ensuring that the process is completed efficiently to align with the government’s broader energy reform objectives.
