In a significant development for Pakistan’s energy sector, the Central Power Purchasing Agency (CPPA) has successfully completed negotiations with 29 Independent Power Producers (IPPs) to reconsider or revise tariff agreements. The major aim behind this is to reduce or cut back electricity costs and ensure a more sustainable power supply for consumers.
Tariff Revisions and Ongoing Agreements
While negotiations have concluded with 29 IPPs, including those owned by the government, further agreements with additional power producers are expected in the coming weeks. The National Electric Power Regulatory Authority (NEPRA) supervised hearings on tariff revision applications from seven IPPs, including
- Nishat Chunian
- Nishat Power
- Narowal Energy
- Liberty Power
- Engro Powergen
- Sapphire Electric
- Saif Power
During these hearings, Nishat Power representatives talked about the withdrawal of pending legal cases against them, but NEPRA officials clarified that cases currently under review by the Islamabad High Court would be resolved by the court. Moreover, Narowal Energy’s representative called for a pricing mechanism to regulate or neutralize fluctuations in furnace oil costs, which is highly impacting electricity generation expenses.
Potential Impact on Electricity Tariffs
As per the CPPA officials, 50 paisa per unit reduction in power tariffs can be possible after the agreements with the 7 IPPs. It is the rough estimate that is based on last year’s reference value generation, providing a modest relief to electricity consumers. However, questions are continuing to emerge regarding the all-inclusive impact, especially considering the massive Rs. 2 trillion capacity payments that consumers continue to bear.
During the hearings, concerned citizens and journalists asked and enquired whether the revised contracts would translate into massive savings for consumers. A journalist also raised concerns about alleged coercion against IPPs, citing a letter sent to the Prime Minister on the matter. In response, CPPA officials strongly denied any coercion, asserting that the government holds the right to renegotiate contracts in the best interest of the country.
Awaiting Final Decision
With NEPRA having finished its hearings, the regulatory body is now analyzing and scrutinizing the data before releasing a final decision on the revised tariffs. Consumers across the country are anticipating the outcome, hoping for tangible reductions in their electricity bills and a more efficient energy sector.