Islamabad   -    The government is negotiating with Independent Power Producers (IPPs) to review power purchase agreements and get concessions in the terms of accord.

IPPs had agreed to review agreements voluntarily for better conditions and Soon we will have another meeting with IPPs in this regard,” secretary Power division Irfan Ali said while briefing Senate Standing Committee on power here.

The senate committee on power that met with Senator Fida Mohammad in chair discussed capacity charges being paid to the IPPs on investment, the details CAPEX on per megawatt, Nepra notified rates, the balance sheets of IPPs and other investors, annual income and rate of return. The committee also discussed the promotion of grade 20 employees of the subsidiaries of the power division to the upper scales.

On the issue of IPPs senator Maula Bakhsh Chandio questioned the officials of the powers division that tell in simple words about those plants that are not generating electricity but payment is being made to them. Senator Nauman Wazir sought details of balance sheets of IPPs. He said that these IPPs had exploited the government at time of agreements. According to their balance sheets submitted to SECP, their profit was 30 to 40 percent.It was also informed that IPPs invested in local currency but they were receiving profit in dollars. He also raised question of paying capacity payment to those power plants that were not generating power but they receiving hefty amounts on account of capacity payment.

The committee also raised question of per Megawatt cost of electricity. It noted that there was discrepancy in approving cost of per Megawatt. Some IPPs were given 0.5 million dollar per Megawatt cost and some were receiving over one million dollar per Megawatt cost.

The officials of the Power division  informed the committee that government had paid Rs 664 billion to IPPs on account of capacity payment in 2017-18. However no capacity payment was made to any power plant in 2017 that was not generating electricity said the official.

Chairman of the committee asked when the agreements, signed back in 1994, with IPPs will get expired? And how much capacity payment has been made to IPPs during 2018-19, he further questioned.

Secretary informed the committee there was no plant that had not been generating electricity and was getting capacity payments.

Nepra has informed the committee that 17 percent rate of return was allowed to the power plants. The committee was also informed that rate of return is being paid in dollars to the IPP. The committee observed that except Pakistan nowhere in the world rate of return is being paid in dollars. How you have allowed 15 to 18 percent rate of return to the IPPs, the committee questioned. Senator Nauman Wazir said that they cannot buy Rs 20 per unit electricity and asked the power division officials to bring it down to Rs 12 per unit.