The Council of Common Interests (CCI) has approved the IGCEP (Indicated Generation Capacity Expansion Plan) model, which will allow efficient usage of electricity, said Minister for Energy Hammad Azhar on Monday.
Azhar, in a series of tweets, said that the model, which was pending since 2005, would only allow power generation to be added when it is needed i.e. based on demand-supply projections, and will be utilising the least-cost basis concept through open competitive bidding.
The federal minister was of the view that through the implementation of IGCEP model issues like excess capacity and expensive, non-transparent power contracts will be avoided in the future as a result.
Had such a model been put in place in the past, we could have avoided circular debt and many other problems,” said Azhar.
Pakistan’s energy sector circular debt reached Rs2.28 trillion in FY 2020-21 from Rs 2.15 trillion in 2019-20, showing a growth of over 6 per cent in its flow.
According to the Power Division, the key reason for the growth in flow of circular debt was payment of Rs 90 billion to some Independent Power Producers (IPPs) excluding under Power Policy 2002 and appreciation in value of rupee till May 2021. In addition, the government also included Rs 77 billion of Power Holding Company (PHL) in the national debt as per agreement with the World Bank, IMF and Asian Development Bank, it added.
Back in June, CCI unanimously approved the National Electricity Policy-2021 to streamline matters related to power sector.
“It is a historic time [for the country] as we have succeeded to formulate a national electricity policy which will have its impact in the next five to ten years when our next generations will get inexpensive and eco-friendly electricity, mainly depending on local fuels,” said Azhar, back then.
Azhar said the policy envisioned special targets for renewable energy, long-term hydel projects and development of local fuels, paving the way to determine power tariff through open competitive process among private investors.