• Says IPPs not favoured during negotiations
• Minister says capacity payment to cross Rs860bn this year
• Secretary claims 25pc share of circular debt due to Discos’ inefficiencies

ISLAMABAD: The government on Wednesday said it would publish the inquiry report on the recent countrywide power breakdown within a few days, insisting that no favour had been given to independent power producers (IPPs) in recent negotiations.

“No NRO has been given to the IPPs; it’s all a misconception. We have to look into ways to rationalise the pacts signed under power policies of 1994, 2002 and 2006,” Minster for Energy Omar Ayub Khan told the National Assembly’s Standing Committee on Power.

He was responding to the comments by members of the panel that NRO (a term used for special favours under political deals) was being given to the IPPs.

MNA Saira Bano said private television channels hosted talk shows and referred to recent negotiations with the IPPs as NRO by paying them Rs450 billion.

Chaudhry Salik Hussain, who heads the panel, said the memorandums of understanding (MoUs) signed with the IPPs set up by the previous governments had not been beneficial for the masses and documentary evidence suggested that the IPPs had overstated their investments.

He said these MoUs needed to be reviewed and lacunas addressed and removed, adding that the IPPs had already recovered their investments and it was high time that the outcome of negotiations with them was beneficial for the masses. He said circular debt had gone up manifold and should be completely written off.

Power Secretary Ali Raza Bhutta said the negotiation committee held talks with the IPPs and as a result finalised and signed the MoUs which were non-binding.

He said agreements had not yet been signed on the basis of those MoUs, adding that the IPPs agreed to do away with dollar indexation with their payments and reduce rate of return.

Omar Ayub said Rs450 billion payment to the IPPs was related to energy they had sold to Central Power Purchasing Agency a long time ago.

Secretary Bhutta explained that the amount pertained to capacity payments and energy price which the government had failed to pay.

Responding to a question about controversial payments of Rs53bn to the IPPs, the secretary said the amount was based on a previous report which stated that prima facie the IPPs had earned Rs53bn over and above their agreements, but a decision to recover this amount from the IPPs would be taken by National Electric Power Regulatory Authority.

Omar Ayub assured the committee that the inquiry report on the countrywide blackout would be made public within a couple of days along with a strategy to prevent such events in future. He said three separate committees were investigating the incident — one constituted by the ministry itself, another by National Transmission and Dispatch Company and third by Nepra.

The ministry acknowledged that protection equipment existed in the plant and promised that it would also be investigated as to why protection mechanism failed.

Nepra chairman Tauseef H. Farooqi said the authority had constituted its own investigation committee four days ago which had already reached the plant, adding that the task would be completed in two weeks. He said Nepra would come up with recommendations so that the government did not face such embarrassment in future. “We are not even able to close circuit-breaker due to which the entire country sank in darkness,” he said.

Omar Ayub told the committee that capacity payment was Rs185bn in 2013 that jumped to Rs642bn in 2019 and would cross Rs860bn this year. He said it would touch Rs1.455 trillion by 2023, showing 686pc increase over 2013.

Secretary Bhutta said 25pc share of circular debt was due to power distribution companies’ (Discos) inefficiencies and lack of recovery, whereas there were different elements at work accounting for the remaining 75pc. To resolve this issue, a comprehensive plan had been formulated to be shared with the cabinet over the next two to three weeks.

Published in Dawn, January 21st, 2021