K-P hydropower projects dropped from national plan

Power minister warns inclusion could raise tariffs by Rs6/unit by 2034, Senate committee urges review

ISLAMABAD:

The Senate Standing Committee on Power met at Parliament House under the chairmanship of Senator Mohsin Aziz.

According to an official statement released on Monday, the committee discussed the 207 MW Madyan and 88 MW Gabral hydropower projects and other energy initiatives. The Special Assistant to the Khyber-Pakhtunkhwa (K-P) Chief Minister on Energy said land worth Rs5 billion had been purchased for the projects, and physical and financial progress had been made. However, the federal government removed them from the Indicative Generation Capacity Expansion Plan (IGCEP) list.

Federal Minister for Power Awais Ahmad Leghari said K-P authorities had not fully presented the Council of Common Interests (CCI)-approved power policy. Citing one clause without context was misleading, he added. Inclusion of these projects could raise electricity prices by Rs6 per unit by 2034.

The minister said the Power Division removed 8,000–10,000 MW of projects from the plan, including some China-Pakistan Economic Corridor (CPEC) power projects, to shield consumers from expensive electricity. The government had also terminated agreements with five Independent Power Producers (IPPs) and renegotiated others, saving an estimated Rs3.4 trillion over four to five years.

He said DISCO losses were reduced by Rs191 billion this year. Electricity theft remained a challenge, but the competitive market target had been achieved, ending mandatory government power purchases.

The committee reviewed captive power plants, costly imported coal and LNG projects, and tariffs for the protected category. The chairman called for revising the protected category policy. Secretary Power Division confirmed a review was underway and that consumers using up to 200 units received subsidies. Aziz urged the introduction of multiple slab rates to prevent sudden tariff hikes.

The committee also discussed Net Hydel Profit (NHP). NEPRA officials said payments were being made to provinces, but K-P representatives called them too low and accumulating. The committee recommended clearing the backlog and paying at least Rs5 billion monthly to K-P. The chair directed that a meeting be held and a report submitted within a week. On wheeling charges, the minister said NEPRA rules had been amended and approved by the Cabinet, reducing the standard Rs28 rate to a Rs12 base rate. The proposal now awaits NEPRA's final approval.

Aziz raised concerns over the return on investment (ROI) of IPPs, with some projects showing ROIs as high as 100%. NEPRA officials attributed this to dollar-based payments. The committee asked NEPRA to provide the last five balance sheets of these power plants for review in the upcoming meeting.