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Event Title: Sub-Committee of Senate Standing Committee on Power

Event Date: 2019-07-26

Sub-Committee of Senate Standing Committee on Power in its meeting on Friday was told that NEPRA has responded to 11 out of the 17 questions posed to NEPRA and needs 3-4 days’ time to conduct the analysis of remaining questions and observations. The Committee observed that the restraining order of the court does not bar Parliamentary Committees to look the matter up. The agenda before the Sub-Committee was to review the issues of high tariff, capacity of charges, heat rates, and calculation of payback periods of IPPs.

The meeting was held with Senator Nauman Wazir Khattak as its convener and was attended among others by Senator Muhammad Akram. The Committee strongly recommended that respective members of NEPRA from provinces should have expertise of one or more departments of the regulatory authority and observed that the committee will consider suggesting a number of recommendations regarding the qualifications and eligibility criteria of the people appointed in NEPRA.

The Committee was given details of the Power policy of 1994, power purchase agreements backed by sovereign guarantee, and the international rate of return of 13% given to IPPs. On a question by the Committee, NEPRA clarified that this 13% was given by NEPRA to IPPs on shareholders’ equity. Due to a number of concerns and apprehensions raised on the policy, it was revised as Policy for Power Generation Projects Year 2002 and later it was decided to index foreign O&M cost with US CPI after an ECC decision. The Power Generation Policy 2015 kept most of the things of previous policy intact and introduced some more projects while also increasing the return on equity to 15%.

The Committee was told that the country today has an installed power generation capacity of 35,000MW, dependable capacity of 28,000 MW, transmitted capacity of 23,000 MW and a peak time shortfall of 3,000 MW. The Committee members remarked that distribution of electricity should be equitable, areas with theft should not be given electricity and subsequently there will be no need of any more power plants. Current tariff for different technologies was told to be 11.66 KWH for coal, 5.28 KWH for wind, 5.76 KWH for solar, 10.58 KWH for RLNG, 18.83 KWH for RFO, 22.33 KWH for GENCOs, 9.74 KWH for Gas based projects, 13.20 KWH for Bagasse. The Committee asked NEPRA to share the tariffs for utilised capacity also on annual basis. Capacity charges of power sector for the financial year 2017-18 were told to be 82 Billion Rupees.

NEPRA told the committee that it has taken notice of access profits of five IPPs and they have had hearings in Islamabad High Court and the next hearing is in 2019 of which NEPRA is quite hopeful that its case will be vigorously defended. The Committee members observed that the committee is open to anyone who comes up to defend himself but currently the committee has a considered opinion that overpayments have been made to IPPs.