Authorities seek Rs2 per unit reduction via talks with power plants

• Officials say govt has managed to get relief of Rs1.43 per unit.
• Till now, future payments of Rs1,400 billion saved, say officials. 
• They say 496MW given from Kapco to stabilise Muzaffargarh system.
  

ISLAMABAD: The Return on Equity (RoE) of government power plants (GPPs) has been cut to 13% by the government based on Pakistani rupee, while the US dollar value has been capped at Rs168.

“More importantly, their capacity payments would be reduced to 35% from 100% just to make sure the plants remain operational. This will result in relief of Re0.44 per unit, senior government officials of the Power Division apprised The News.

This is how the total relief the government would get will be around Rs2 per unit once the ongoing talks with wind power plants and solar plants amicably end,” the official said.

The officials said following the termination of power purchase agreements (PPAs) of five independent power plants (IPPs), delinking of tariff of eight bagasse power plants from US dollar and connecting it to Pakistani rupee and revision of contracts of 14 IPPs based on take and pay mode, so far the government has managed to get the relief of Rs1.43 per unit.

"Till now, we have saved the future payments of Rs1,400 billion and after deals are done with government power plants and wind and solar plants, the future savings would rise to Rs2,600 billion," they said.

They said the termination of five IPPs contracts yielded a relief of Re0.77 per unit, revision of contracts of eight bagasse-based power plants Re0.14 per unit, and the revised PPAs of 14 IPPs based on take and pay mode has provided relief in tariff of Re0.43 per unit.

"So much so, the termination of contract with PakGen power plant and in its place, the inclusion of Kapco power plant of 496MW in the system would also give the relief of Re0.09 per unit."

The Power Division officials said 496MW had been given from Kot Addu Power Company (Kapco) to stabilise the system in Muzaffargarh on the request of the National Transmission & Despatch Company and after three years’ time, Kapco would hand over the plant of 496MW and switchyard to the government without payment of any penny.

To a query, the relevant official said: “The CPEC power plants are getting capacity payments of Rs600 billion per annum, nuclear power plants Rs510 billion, hydel power plants Rs200 billion, Wapda hydel Rs24 billion, and RLNG based power plants Rs34 billion.”

The official said that hydel power plants such as Suki Kinari, Meera, Gul Pur, Karot, and Star hydropower plants were getting Rs200 billion as capacity payments per annum.

“Out of RLNG power plants, Haveli Bahadur Shah and Baluki power plants are getting Rs18 billion as capacity payments per month whereas, Quaid-i-Azam and Punjab thermal power plants are having capacity payments of Rs16 billion (Rs8 billion each).

“We are currently in talks with wind and solar power plants and hope to get a middle way to revise their contracts. The Power Division would soon contact Foreign Office and Prime Minister’s Office to this effect as in the said project, lenders from USA, Canada and Denmark are included. Their debt payment tenure stands for 3-4 years. We hope to get relief of Re0.13 per unit after talks with wind and solar power plants.”