IPPs receive Rs422b ‘without generating electricity’

Senator claims power producers had submitted manipulated figures about <br /> fuel consumption

ISLAMABAD: The Senate Standing Committee on Power was informed on Wednesday that independent power producers (IPPs) were receiving a hefty amount of Rs422 billion annually, on account of capacity payments, without generating electricity.

The parliamentary panel was chaired by Senator Fida Muhammad.

Speaking on the occasion, Senator Nauman Wazir Khattak claimed that power producers were receiving a hefty amount of Rs422 billion per annum, on account of capacity payments, without generating electricity, which was due to faulty agreements.

He suggested that the government should ink an agreement without the condition of capacity charges and power plants should instead receive money for the electricity they generate.

He said the guaranteed rate of return was 17% for independent power plants (IPPs) but, according to the balance sheet, they were receiving 40%. Khattak said the government should initiate a probe into the National Electric Power Regulatory Authority (Nepra) for allowing different costs for different projects. He said the cost of some projects has been allowed at $0.5 million per megawatt (MW), some at $1 million and $1.5 million for other projects.

The senator informed the meeting that the power producers had submitted manipulated figures about the consumption of fuel to the government. These power plants were not receiving money according to the heat rate and therefore were making exorbitant rate of return.

The senator suggested that the government should ink an agreement without condition of capacity charges and power plants should receive money for the electricity they generate.

The sub-body of the senate committee on power also submitted its report on Lakhra power plant. While briefing the committee, Senator Khattak said it was the only plant installed on locally-produced coal. He said the machinery of Lakhra power plant was installed in 1997, but the locally-produced coal did not match the specification.

The power plant was not shut down as per the schedule for proper maintenance purpose, which also led to problems, he said, adding that local manpower of 6,000-7,000 had been engaged in coal mining to run this project. He informed the panel that the coal mine had proven coal reserves for the 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 plant. The senator said the existing capacity of this power plant was 150 megawatt (MW), which could be enhanced to 650MW.

He said the plant could resume operations with an investment of $30 million in the next three months. It would require an investment worth $250 to $300 million to increase the capacity to 650MW, he remarked. He added that its electricity generation cost was Rs4.75 per unit and the sub-committee proposed reversed bidding of this project to resume operations.

Published in The Express Tribune, February 7^th, 2019.

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