In addition to the belated notice of the IPPs and the killing capacity payments in PPAs with them, the complexity of the power supply and delivery business is often underestimated.This misunderstanding leads to advice from individuals, including a former minister, to renegotiate or revise PPAs on a “take-and-pay” basis instead of the “take-or-pay” arrangement, treating it as a simple fix.
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The power sector of Pakistan has remained under severe stress for more than two decades. To fill the gap between supply and demand the government introduced three Power Polices in 1994, 2002 and 2015 and signed long-term agreements of up to 25 years with 79 IPPs (independent power producers). According to a report by an inquiry committee headed by Muhammad Ali, former Chairman of the SECP (Securities and Exchange Commission of Pakistan) and now the Minister of Energy, IPPs earned 17% rate of return in US$ which at the time…
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A closer look at the flawed governance system impacting consumers as electricity prices soarIn a recent development, Nepra, the regulatory authority for the power sector in Pakistan, issued a notification announcing an increase in electricity prices to 4.56 rupees per unit. This move sheds light on the inadequacies of our inefficient and corrupt governance system within the power sector.Consumers, who are already burdened with paying approximately 80-100 rupees per unit, including various taxes and charges, are likely to face a surge in their electricity bills. The prevalent corrupt governance system…
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