Govt to review contracts with 15 IPPs

Sources say taskforce led by energy minister finalises framework to provide relief to masses

ISLAMABAD:

The federal government would review the power purchase agreements with 15 Independent Power Producers (IPP) as part of its efforts to provide relief to the people, who were reeling under the exorbitant electricity bills, sources said on Thursday.

They said that the government had also been working on changing its policy for the consumers, using more than 201 electricity units as it was mulling over creating a special slabs under which such users would be charged at the rate of Rs26 per unit.

"A taskforce led by Energy Minister Awais Leghari has finalised the framework for the review of contracts with 15 IPPs, which were set up in the 1990s," a source said, adding that six contracts would be terminated, with those with nine others would be ended in phases.

Talking to reporters in Islamabad, meanwhile, Power Minister Leghari confirmed the formation of a taskforce to review the agreements with IPPs and "find out possibilities of shutting down old power plants to reduce the rate of capacity payments".

The government decided to conduct exercise to bring reforms in the power sector as consumers pay an exorbitant amount of Rs2.2 to 2.8 trillion every year on account of capacity payments. "The government wants to introduce reforms immediately and privatize power distribution companies (DISCOs)," he said.

According to the minister, the government was assessing measures to reduce the electricity costs and even considering the taxes cuts. "Different stakeholders will coordinate to enforce reforms in the power sector," he added.

Speaking about the 'Task Force on Implementation of Structural Reforms in Power Sector', Leghari said that different companies, relating to the Securities and Exchange Commission of Pakistan (SECP), had been included to review all the aspects of the power sector.

On the occasion, Taskforce Co-Chairman Muhammad Ali said that all issues in the power sector would be considered, including the issues of the IPPs and the steps to bring down the generation cost. "The government is also looking into the options for lessening burden on the consumers."

"All [the relevant] departments have the representation in this taskforce and it is looking into the IPPs issue to cut generation cost," he said. "The government wants electricity supply directly to the consumers [by the producers]. The government will do this through wheeling charges mechanism."

Earlier, Awais Leghari and Muhammad Ali co-chaired the first meeting of the taskforce. In the maiden meeting, Leghari, some 20 to 22 key points for reforms in the power sector, were considered.