ISLAMABAD: The federal government has conveyed its frustration to the Punjab government over delays in approving tariff reductions for two of its LNG-based power plants — Bhikki and Trimmu — with a combined capacity of over 2,400MW. The proposed tariff revision could save around Rs600 billion over the plants’ remaining operational life of 18 to 23 years.
A senior official told Dawn that the Central Power Purchasing Agency (CPPA), a subsidiary of the Power Division, had been consistently following up with Punjab’s energy department to complete formalities necessary to file tariff reduction petitions before the National Electric Power Regulatory Authority (Nepra). Despite being placed on the Punjab cabinet’s agenda before Eidul Fitr, the official said, no approval had been granted as of April 25.
Both plants are among the country’s most efficient, operating at over 61 percent efficiency. The Bhikki plant, with a capacity of 1,180MW, began operations in 2018 and will run until 2043, while the 1,262MW Trimmu plant, operational since May 2023, is expected to last until 2048.
The federal government had already secured cabinet approvals for its own LNG plants — Balloki and Haveli Bahadur Shah — and filed petitions with Nepra, which held public hearings last week. The Centre had hoped for a simultaneous regulatory process for all four plants, but the provincial delay has stalled progress.
The revised agreements, finalized by the government’s task force on power producers, aim to transition these plants to a ‘hybrid take-and-pay’ model, cap dollar indexation at Rs168, reduce returns on equity (ROE), and shift to rupee-based indexations. These measures are expected to curb foreign exchange exposure and stabilize tariffs for consumers.
Nepra stated that the return structure has also been rationalized: 35 percent of ROE will be fixed while the remainder will depend on actual plant operations. Additionally, Operations & Maintenance (O&M) cost indexation has been capped at 70 percent of rupee devaluation, compared to the previous 100 percent.
The Centre projects savings of about Rs2.16 trillion from six government-owned plants, including Bhikki and Trimmu, with Rs1.57 trillion savings from four federal projects alone. In total, through renegotiated agreements with 29 IPPs and GPPs, the government estimates potential savings of Rs3.5 trillion over the remaining useful life of these projects.
Story by Khaleeq Kiani
