ISLAMABAD: The Cabinet Committee on Energy (CCoE) directed the Power Division on Wednesday to speed up implementation of various measures within given timelines to reduce energy costs, particularly the unsustainable burden of capacity payments.

Federal Minister for Planning, Development and Special Initiatives Asad Umar presided over a brief meeting because of his other engagements relating to Covid-19 coordination and upcoming schedule of meetings with managements of the Independent Power Producers (IPPs).

Secretary Power Division Irfan Ali briefed the committee about the implementation status of the decisions taken in the last CCoE meeting held on April 2.

He told the committee that a meeting with the Federal Board of Revenue (FBR) had been held over the issue of stuck-up refunds worth Rs250 billion and required a follow up session for conclusion.

Also, the committee was informed that two meetings with management of the IPPs had been convened on Thursday to deliberate various viable and mutually-acceptable options to make the power sector sustainable. The IPPs had been conveyed about the potential areas for discussions including heat rate test, foreign currency indexation for local investors, rescheduling or increasing the debt terms, reasonability of operations and management costs and the return on equity.

The committee noted the position and directed that the approved measures may be implemented as per the timelines. The committee directed that a summary for adjustment/refund of general sales tax from the FBR should be moved immediately to the federal cabinet for its upcoming meeting.

The proposal under discussion included rationalising the capacity charges of government-owned power plants by reducing return on equity, extending the tenor of loans of various power plants and fuel cost optimisation.

The CCoE has set up deadlines for various actions to be completed within 45 days for major policy decisions and their implementation with effect from June this year.

The Power Division also briefed the meeting on various actions taken to improve the governance in the power sector. The CCoE directed the Power Division to submit a formal summary to the committee containing proposals for further reforms in the sector’s governance structure.

The committee would meet again on Friday for feedback from the IPPs and to take up the remaining agenda items pertaining to the ‘Competitive Markets for Electricity and Impact of Covid-19 Pandemic on the Energy Sector’.

Published in Dawn, April 16th, 2020

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