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Express Tribune
19-05-2025
- Business
- Express Tribune
CM hosts forum to discuss transition of CPPs to DISCOs
Sindh Chief Minister Murad Ali Shah on Sunday hosted a high-level forum to bring together federal ministers and industrialists' leadership to discuss issues surrounding the mandatory shift from Captive Power Plants to power distribution companies (DISCOs), as per a recent cabinet decision. The meeting decided that all proposals and reservations expressed by the industrialists would be submitted to the Prime Minister for his final decision, according to a statement from CM House. It was also decided that the Prime Minister would be requested to constitute a committee to determine the transitional period regarding the imposition of levies. The Chief Minister categorically stated that the gas withdrawn from Captive Power Plants after the transfer of industrial units to the national grid must remain within the province. The meeting served as a platform for brainstorming between industrialists and federal government representatives to establish a timeline for the transition from Captive Power Plants to DISCOS. The meeting, held at CM House, was attended by the CM Murad Ali Shah, Federal Finance Minister Muhammad Aurangzeb, Petroleum Minister Ali Pervaiz Malik, Power Minister Awais Leghari, PM's Special Assistant Rana Sanaullah, MNAs Syed Naveed Qamar, Asad Alam, Mirza Ikhtiar Baig, Chief Secretary Asif Hyder Shah, federal and provincial secretaries concerned, MD SSGC, CEO Moonis Alvi, and leading industrialists of the city, including Zubair Motiwala, Shabir Diwan, Jawed Balwani, and others. The meeting focused on in-depth discussions regarding the proposed increase in captive power tariff. "There are approximately 660 Captive Power Plants in Sindh," the CM said. "Industrialists have raised concerns over the proposed tariff hike. We have dedicated this Sunday to listening to them," he added. The Chief Minister expressed gratitude to the federal government for agreeing to hear the concerns of industrialists firsthand. He urged federal ministers to gather input directly from industry stakeholders before making any decisions. Federal Finance Minister Muhammad Aurangzeb, while briefing the participants, said, "we are here today at the invitation of the Sindh government to listen to the concerns of industrialists. The country's economy is growing, and this progress includes the efforts of all stakeholders. The prime minister has directed us to introduce policies that ensure industrial growth." Petroleum Minister Ali Pervaiz Malik highlighted that President Asif Ali Zardari and PPP Chairman Bilawal Bhutto Zardari have also emphasised the importance of resolving industrial issues in Sindh. He acknowledged CM Shah's efforts and commitment during a previous Zoom meeting with industrialists. Power Minister Awais Leghari informed the meeting that a 30 per cent reduction in industrial tariff has already been implemented. He added that distribution companies (DISCOs) are improving their operations and a feasibility plan for 7,000 MW of power generation is ready.
Business Recorder
19-05-2025
- Business
- Business Recorder
Captive power shifting to Discos: Murad hosts federal govt ministers-industrialists meeting
KARACHI: Sindh Chief Minister Syed Murad Ali Shah hosted a forum to bring together federal ministers and industrialists' leadership to discuss the issues of shifting from Captive Power Plants to DISCOS, which, as per the cabinet decision, is mandatory. However, the meeting decided that all proposals and reservations expressed by the industrialists would be submitted to the prime minister for his final decision. The prime minister would also be requested to constitute a committee to determine the transitional period regarding the imposition of levies. The chief minister categorically stated that the gas withdrawn from the Captive Power Plant after the transfer of industrial units to the national grid must remain within the province. The meeting served as a platform for brainstorming sessions between industrialists and federal government representatives to establish a timeline for the transition from their Captive Power Plants to the DISCOs. The meeting, held at CM House was attended by Sindh Chief Minister Syed Murad Ali Shah, Federal Ministers for Finance Muhammad Aurangzeb, Petroleum Ali Pervaiz Malik, Power Awais Leghari, PM Special Assistant Rana Sanaullah, MNAs Syed Naveed Qamar, Asad Alam, Mirza Ikhtiar Baig, Chief Secretary Asif Hyder Shah, federal and provincial concerned secretaries, MD SSGC, CEO Moonis Alvi, and leading industrialists of the city – Zubair Motiwala, Shabir Diwan, Jawed Balwani, and others. The transition from Captive Power Plants to the national grid or DISCOs must be facilitated, for which the federal government must reassure the industrialists, the CM said, adding that a mutually agreed-upon timeline must be established. The meeting focused on in-depth discussions regarding the proposed increase in the captive power tariff. 'There are approximately 660 captive power plants in Sindh,' said CM said. 'Industrialists have raised concerns over the proposed tariff hike. We have dedicated this Sunday to listening to them,' he added. The Chief Minister expressed gratitude to the federal government for agreeing to hear the concerns of industrialists firsthand. He urged federal ministers to gather input directly from industry stakeholders before making any decisions. Industrialists voiced objections, stating that an additional charges have been imposed on industries under the 'De-Grid (Captive Power Plants) Levy Ordinance 2025.' Gas companies are already overcharging. Any further taxes on captive power plants could become unbearable for industries. It is not feasible for industries to shut down captive power plants and rely solely on electricity from the federal grid, as the grid supply is often unstable, the industrialist said. At this, Federal Finance Minister Muhammad Aurangzeb, while briefing the participants, said, 'We are here today at the invitation of the Sindh government to listen to the concerns of industrialists. The country's economy is growing, and this progress includes the efforts of all stakeholders. The Prime Minister has directed us to introduce policies that ensure industrial growth.' Petroleum Minister Ali Pervaiz Malik highlighted that President Asif Ali Zardari and PPP Chairman Bilawal Bhutto Zardari have also emphasised the importance of resolving industrial issues in Sindh. He acknowledged CM Murad Ali Shah's efforts and commitment during a previous Zoom meeting with industrialists. Power Minister Awais Leghari informed the meeting that a 30 per cent reduction in industrial tariff has already been implemented. Distribution companies (DISCOs) are improving their operations. A feasibility plan for 7,000 MW of power generation is ready. Leghari said that Industrialists will eventually need to shift from captive power generation to DISCOs/distribution networks. So far, 583 captive power plants have already transitioned to the DISCO grid. CM Murad Ali Shah reiterated the ultimate goal of shifting all captive power plants to the national grid but stressed that this transition should not overburden consumers. 'If gas is cut off from captive power plants, it should remain within Sindh and not be diverted elsewhere,' he asserted. Special Assistant to the Prime Minister Rana Sanaullah described the meeting as `highly productive' and assured that all suggestions made by the CM and industrialists would be conveyed to Prime Minister Shehbaz Sharif. It was agreed in the meeting that the Industrialists' proposals would be formally presented to the Prime Minister. He said that a committee would be formed to review whether a tax should be imposed during the transition period from captive power to the national grid. The final decision on taxation will be made by Prime Minister Shehbaz Sharif. Copyright Business Recorder, 2025
Business Recorder
15-05-2025
- Business
- Business Recorder
Textile sector may return to costlier CPPs: PD's PPP projections to Nepra draw sharp criticism
ISLAMABAD: The Power Division came under heavy criticism on Thursday for submitting what were termed unsubstantiated Power Purchase Price (PPP) projections for FY 2025-26 to Nepra and for the continuing unreliable power supply by distribution companies (Discos). Concerns were raised that these issues could drive the textile sector back to costlier Captive Power Plants (CPPs), despite grid electricity being comparatively cheaper. The National Electric Power Regulatory Authority (NEPRA) held a public hearing chaired by Waseem Mukhtar, with participation from Member (Technical) Sindh Rafique Ahmad Shaikh, Member (Technical) KPK Maqsood Anwar Khan, and Member (Law) Amina Ahmed. Discussions revolved low hydrology levels, inflation, interest rate forecasts, GDP growth, solar tariffs, and fuel price assumptions. The Power Division team, led by Additional Secretary Mehfooz Bhatti and CPPA-G's Naveed Qaiser, presented seven scenarios using sensitivity analysis based on demand, hydrology, fuel prices, and exchange rates. In scenario one, CPPA-G has projected PPP at Rs 24.75 per unit, scenario 2- Rs 26.04 per unit, scenario 3- Rs 25.88 per unit, scenario 4- Rs 26.33 per unit, scenario 5- Rs 26.70 per unit, scenario 7- Rs 26.55 per unit and scenario 7, Rs 26.22 per unit. In response to a question, the representative of CPPA-G said that scenario 4 and 5 are likely to be implemented next year. Across the analyzed scenarios, indigenous fuels constitute 55% to 58% of the overall energy mix, while clean fuels contribute between 52% and 56%. Scenario 5 — marked by a high exchange rate of Rs 300/$, low hydrology, standard fuel prices, and normal demand—yields the highest projected PPP at Rs. 26.70/kWh. In contrast, Scenario 4 which assumes normal demand and an exchange rate of Rs 280/$, results in the lowest PPP at Rs. 24.75/kWh, primarily due to reduced capacity charges. Policy overhaul needed for textile sector CPPA-G representative Naveed Qaiser noted that the GDP growth, inflation and interest rates were projected on the information from IFIs, Finance Ministry and domestic financial experts. Amir Sheikh from Lahore stated that industry demands that electricity tariff decreases and in no way increases from July onwards as compared to the April/May/June quarter. 'Already the quality of power from grid is very poor resulting in up to 10% production loss as compared to captive generation and industry is considering switching back to captive. If tariff also increases, then it would lead to big fall in consumption,' he said adding that despite major renegotiations with IPPs, industry is amazed that the proposed tariff for next year is almost the same as last year and the benefit from renegotiations is nowhere to be seen. 'The various price deductions that were announced by Nepra were all time-bound till June. Therefore, if base tariff is not decreased from July 1, 2025 the tariff may increase by Rs 5-6 after the benefit of negative QTA and FCA will be over,' Amir Sheikh said. Chairman Nepra Waseem Mukhar directed Power Division to look into the viewpoint of industry, especially with recent poor quality of power supply from Discos, which is an irritant for industry and to provide future projections of power rates so that industry can make its plans accordingly. Mehfooz Bhatti, Additional Secretary Power said that abrupt suspension of supply is a serious issue and he would look into it through Power Planning and Monetary Company (PPMC). Arif Bilwani said that hydrology assumptions are very critical as we are facing substantially reduced water flows because of draught like conditions. Nepra has already directed the CPPA to prepare report and share and requested that the report be displayed on Nepra website. 'GDP growth figure is also on higher side as the World Bank has revised its projections downward from 2.8% to 2.7%. Demand growth is also not reflecting ground realities. Consistent decline in industrial demand particularly from LSM is being reported for the last 1 1/2 years, he added. 'Benefits of renegotiation with IPPs and GENCOS is not being reflected in Capacity Payments. Further increase in CPP (Rs. 60 billion) will accrue due to Jamshoro imported coal power plant. There is no mention/impact of renegotiation with the left out IPPs, GENCOs & Chinese power plants,' Bilwani argued. Kibor has been assumed at 11.9% although it is expected to be further reduced during the year reaching single digit. Inflation has been assumed at 8.65% which is extremely high, although the country is already witnessing, as per GOP, the lowest inflation in decades. There is a need to readjust the two figures. Bilwani further stated that the impact of solar Net Metering has not been properly accounted for in the assumption and requires to be looked at. The representative of Punjab Power Board enquired as to what was the financial impact of renegotiated IPPs and have the PPAs been made part of the assumption as projections of capacity payments are the same as last year. Naveed Qaiser responded that government had projected Rs 4 trillion reduction in capacity but reduced it to Rs 2 trillion to 2.4 trillion due to COD of Jamshoro Power Plant which will cost Rs 60 billion and Shahtaj Sugar Mills. Member KPK, enquired as to how much will the industrial tariff be reduced? The representative of CPPA-G stated that electricity rates can be reduced from 1 per cent to 8 per cent. According to Qaiser, projections for GDP growth, inflation, and interest rates are based on input from IFIs, Finance Division and other relevant entities. Nepra Chairman Waseem Mukhtar instructed the Power Division to take the concerns of industry seriously, particularly regarding poor service quality from Discos and future power pricing so industries can plan accordingly. Bhatti acknowledged that sudden power interruptions are a major issue and added that there is a commitment to addressing them through the PPMC. Tanveer Barry, representative from KCCI Karachi said that the projected power purchases ranges between Rs 24.75/kWh and Rs 26.22/kWh is still very high. This level of tariff undermines industrial competitiveness and increases the cost of doing business and may deter export growth. He further argued that the government claimed that it has saved trillions of rupees through negotiated agreement but capacity charges are still very high. In Pakistan industrial sector is paying almost double the electricity price as compared to other regional countries. Time of Use power tariff structure for industrial consumers should be abolished. Industrial consumption is declining because of expensive electricity. Expensive power plants should be shut down and replaced with efficient power plants and renewable energy. Rehan Jawed stated that the government should take a decision on net metering otherwise it will be become a big issue for the power sector like IPPs issue. The representative of Aptma, Amir Riaz criticised the planners for making irrelevant decisions. He proposed integrated approach to reduce electricity rates for the industry. Copyright Business Recorder, 2025
Business Recorder
05-05-2025
- Business
- Business Recorder
PD clarifies CPP levy adjustments to be reflected in future bills
ISLAMABAD: Petroleum Division has clarified that any rebate or adjustment in the Captive Power Plants (CPP) levy will be considered in subsequent billing months based on the determination of FCA by Nepra applicable for the respective month of the power tariff. In a letter to Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC), the ministry explained the imposition and collection of levy under Grid (Captive Power Plants) levy ordinance 2025. Earlier, the division instructed gas utilities to initiate billing of CPP's consumers under the newly enacted Grid (Captive Power Plants) Levy Ordinance, 2025. The move marks the formal commencement of levy collection from captive power users for the month of February 2025. The division further instructed that the billing must be carried out in accordance with Section 3 of the ordinance, which mandates a levy on gas consumption by captive power plants not connected to the national grid. Grid Transition Levy: APTMA urges PD to address inaccuracies In an earlier letter it was directed to relevant gas distribution companies to ensure compliance without delay and urgently report the total amount already billed or to be billed to the concerned authorities. The ordinance, promulgated earlier this year, is part of IMF's commitments that aimed at discouraging inefficient captive power generation and encouraging industrial consumers to shift toward the national electricity grid. Copyright Business Recorder, 2025
