Friday, December 20 2024

Bagasse-based IPPs agree new deals
The cabinet has given the go-ahead for signing revised agreements with eight bagasse-based independent power producers (IPPs), owned by the ruling elite and political barons. According to the revised agreements, the IPPs will reduce their working capital component of tariff by 50% with effect from October 31, 2024. These agreements are estimated to lead to savings of Rs238 billion when operated at full load. The IPPs agreed to change their return on equity (ROE) and return on equity during construction (ROEDC) components of tariff to 17% per annum, calculated at the rupee-dollar exchange rate of 168, with no future dollar indexation, effective from October 31, 2024.
Related news categories: business economic-indicators power-gen-dist

Monday, December 16 2024

An energy strategy conundrum
Pakistan’s energy sector is a pertinent example of a systemic issue that extends beyond mere implementation challenges. This sector grapples with persistent policy inconsistencies and ambiguities, an obsolete governance model influenced by vested interests, and unprofessional management. There is a notable lack of coordination along energy supply chains and among various energy subsectors — a failure to develop an integrated energy plan. In Pakistan, the energy sector is not driven by market forces but by government decisions. Policymakers believe they know everything. They seek policy guidance only from donors or foreign consultants. Their assertions, or perhaps misconceptions, elude the intellectual rigour necessary to comprehend the intricate nature of this longstanding and profound chaos, which poses real and substantial threats to the sector’s and country’s development.
Related news categories: business economic-indicators power-gen-dist

Finance: Navigating continuing challenges
Pakistan’s electricity supply companies caused a staggering Rs660 billion loss to the national exchequer in the last fiscal year ending June 30, 2024, according to a recent Dawn report. To put this in perspective, this amount is 11 times the federal government’s Rs59.7bn budget for higher education last year. This comparison starkly highlights the depth of the structural problems afflicting Pakistan’s power sector. The inefficiencies of electricity supply companies are draining national resources, leaving little fiscal space for the government to invest in the economic welfare of Pakistan’s 241 million citizens. While the power sector reforms are underway, even the most optimistic policymakers acknowledge that eliminating these losses is unlikely in the near future.
Related news categories: business economic-indicators power-gen-dist

Friday, December 13 2024

Govt yet to appoint financial advisers for five power firms
The government has yet to appoint any financial adviser for three power distribution companies (Discos) and two generation companies (Gencos) selected for the first round of privatisation. The Power Division disclosed this before the Senate Standing Committee on Power which expressed displeasure over the absence of Power Minister Awais Leghari and Secretary Power Dr Fakhre Alam despite prior commitment and also showed concern over harassment of industrialists in Khyber Pakhtunkhwa who were applying for solar net-metering. The meeting of the panel presided over by Senator Mohsin Aziz deferred agenda items pertaining to negotiations with independent power producers (IPPs) and matters relating to the disposal of assets (movable/immovable), liabilities, and employees of each Discos on privatisation agenda. Mr Aziz said the meeting had been set in consultation with the minister and secretary of power, who wanted a 20-day gap but did not turn up for the meeting after 36 days.
Related news categories: business economic-indicators power-gen-dist

Provinces told to pay Rs150bn dues to avoid power cut
The federal government on Thursday asked all the four provincial governments to clear their electricity bills amounting to Rs150 billion in order to avoid power cuts and financial loss to the national economy. In separate letters, Power Minister Awais Ahmad Khan Leghari sought personal intervention of the four chief ministers to help clear dues outstanding against their departments. He warned that “with limited financial resources available with Distribution Companies (Discos), it would be very difficult to continue uninterrupted electricity supply, not to speak of financial losses to the federal government and the ensuing circular debt which is devouring our economy”. According to these letters, Sindh tops the list with payables totalling Rs59.68bn as of September this year, followed by Balochistan’s Rs39.6bn and Punjab’s Rs38.01bn. Khyber Pakhtunkhwa has the lowest electricity payables amounting to Rs8.88bn.
Related news categories: business economic-indicators power-gen-dist