Govt denies external pressure over IPP deals

ISLAMABAD: While denying any external pressure during negotiations with the Independent Power Producers (IPPs), Power Secretary Fakhar Alam Irfan told the National Assembly Standing Committee on Power on Wednesday that violations by IPPs had been identified.

Committee chair Muhammad Idrees expressed concern over the poor performance of Lahore Electric Supply Company (Lescoo) and asked to strengthen its accountability system to penalise culprits to overcome electricity theft.

The committee also expressed concerns about imposing 7.8 million extra units on the consumers of District Kasur on the presumption of theft.

A four-member Sub-Committee headed by Rana Muhammad Hayat Khan had been formed to probe into the matter and submit its report within 30 days.

The secretary power division also revealed that Lesco reported losses of Rs83 billion last year, while Pesco’s losses stood at Rs130bn. These losses were attributed to non-recovery of bills and electricity theft.

Meanwhile, Syed Mustafa Kamal of MQM, who joined the meeting through video link, questioned the officials why consumers had not yet received relief from revised agreements with IPPs.

In response, the power secretary said it had only been two months since the process began, and relief would start materialising soon.

Mr Kamal further asked whether there was any truth to reports of pressure on IPPs.

The power secretary reiterated that negotiations had been conducted without any pressure. “We invited all IPPs and informed them to resolve matters through dialogue; otherwise, a forensic audit would be conducted,” he said.

He added that one or two IPPs had suggested resolving disputes through the London Court of International Arbitration, but the government did not agree to arbitration.

“On this issue, the minister for power was scheduled to meet the British High Commissioner,” he said.

Discussing energy initiatives, the power secretary revealed that the government plans to install a 1,000-megawatt battery storage project in the southern region to stabilise the grid by storing wind energy.

Talks are underway with the World Bank, Asian Development Bank, and Islamic Development Bank to finance the project, which is estimated to cost $500 million.

The officials of the Power Division informed the committee that the ministry was seeking Rs12.93bn for the Jamshoro coal-based power plant for its remaining work, as it is almost completed.

This is an imported coal-based plant, and its test run is yet to take place.

When asked why local coal is not being used, the secretary said that the expansion of the Thar coal mine is underway, along with the construction of a railway line from Thar to Port Qasim.

The secretary provided information on the power generation cost of different fuels. Electricity produced from oil costs Rs35 per unit, imported coal Rs16, and from local coal just Rs4 per unit.

The government aims to shut down oil-based power plants within next three to four years.

Mr Kamal said that unless the monopoly of distribution com-panies (Discos) is broken, they are divided into smaller companies, and multiple players are introduced, the issue will not be resolved.

In response, the secretary said the government is moving toward a system with multiple buyers and sellers. “We have re­­gistered the Independent Sys­t­­e­­­m and Market Operator (ISMO) company, and a wheeling policy is required for its operation, which is expected by the end of March. Once in place, even electricity from any plant in Mala­kand can be purchased by anyone in Karachi,” he added.

Published in Dawn, February 27th, 2025