ISLAMABAD - The Senate standing committee on power was Wednesday informed that that independent power producers (IPPs) were receiving huge amount of Rs 422 billion annually on account of capacity payments. The Senate standing committee on power that met with Senator Fida Muhammad in chair was also informed that IPPs were given guaranteed rate of return of 17 percent but according to balance sheet of power plants, they were getting 40 percent rate of return.

Independent Power Producers were receiving heavy amount of Rs 422 billion annually on account of capacity payments due to faulty agreements without generating electricity, claimed Senator Nauman Wazir Khattak while talking in the meeting.

Senator Khattak said that guaranteed rate of return was 17 percent for independent power producers (IPPs) but according to balance sheet of power plants, they were receiving 40 per cent rate of return. He further said that government should initiate probe against National Electric Power Regulatory Authority (Nepra) for allowing different cost for different projects. The cost of some projects has been allowed at $0.5 million per MW, some $1 million and some projects at $1.5 million, he maintained. 

Nauman Wazir Khattak said that power producers had given manipulated figures about the consumption of fuel during time of submitting business plan to the government. These power plants were not receiving money according to heat rate and therefore were making exorbitant rate of return, he added. Government should ink agreement without condition of capacity charges and power plants should receive money for the electricity they generate, he suggested.

The subcommittee of the Senate committee on power also submitted its report on Lakhra power plant. While briefing the committee, senator Nauman Wazir said that it was only plant installed on locally produced coal. He said that machinery of Lakhra power plant was installed in 1997 but the locally produced coal did not match the specification. He said that power plant was not shut down as per schedule for proper maintenance purpose which also led to problems. He said that 6000-7000 local manpower had been engaged in coal mining to run this project. He further said that coal mine had proven reserves of coal for next 55 years to operate this plant.  

He further said that they had also held meetings with investors like Fauji Foundation who were ready to invest in this power plant. He said that existing capacity of this power plant was 150 megawatts (MW) which could be enhanced to 650 MW. He said that plant could resume operations with investment of US$30 million in next three months. He added that it would require US$250 to US$300 million investment to increase its capacity to 650 MW.