Latest news with #IGCEP
Business Recorder
20-05-2025
- Business
- Business Recorder
PM Shehbaz approves 10-year roadmap for Pakistan's power sector
ISLAMABAD: Prime Minister Shehbaz Sharif has directed the Power Division to continue efforts aimed at reducing electricity prices, eliminating circular debt and controlling line losses and theft, sources told Business Recorder. These directives were issued as the Prime Minister approved the Integrated Generation Capacity Expansion Plan (IGCEP) 2024–34, a long-awaited 10-year roadmap for Pakistan's power sector. The plan is expected to save $17 billion through rescheduling and cancellation of 7,967 MW of planned projects. The core objective of the IGCEP is to ensure the availability of affordable and reliable electricity. All new projects included in the plan have been selected based on the minimum-cost principle. PM approves 10-year IGCEP 2025–35 According to official estimates, the revised strategy is expected to reduce the national economic burden by Rs 474.3 billion and yield savings of approximately $10 billion (Rs 2,790 billion) by adjusting project timelines. An additional $7 billion (Rs 1,953 billion) in savings is projected by scrapping 7,967 MW of proposed projects. These changes are also expected to bring down electricity tariffs, with estimated average savings of more than Rs 2 per unit. Officials assert that — for the first time — electricity projects have been chosen purely on merit and in full transparency. Costly and unnecessary projects have been removed, with national interest prioritized over individual or political gain. 'The Power Division, through structural reforms, shall make continuous efforts to reduce the price of electricity, eliminate circular debt, control line losses and theft, and eradicate corruption in Discos,' the Prime Minister was quoted as saying. 'Renewable energy must be promoted to protect the climate and save foreign exchange currently spent on imported fossil fuels,' he added. Under the original IGCEP, 14,984 MW of new projects were planned. This has now been trimmed to 18 projects totaling 7,017 MW, including strategic hydropower projects such as Dasu and Mohmand Dams. Priority has been given to 7,987 MW of projects based on indigenous resources —hydropower, solar, nuclear, and wind — to reduce dependency on imported fuels like coal and natural gas, thereby saving billions in foreign exchange annually. The Ministry of Water Resources has been tasked with ensuring timely completion of strategic hydropower projects according to the Prime Minister's approved timelines. The Ministry must also ensure financial close of these projects and prevent any cost overruns. The Chairman of WAPDA has been directed to submit regular progress reports to the Prime Minister. Additionally, the Secretary Power, Secretary Petroleum, and Chairman of the Task Force have been instructed to resolve inter-ministerial and cross-cutting issues to ensure smooth operations and timely implementation. A high-level committee has also been constituted to oversee reforms in the petroleum sector. This committee will develop strategies to synchronize LNG demand with the power sector's requirements, address cargo diversion issues, and tackle circular debt and tariff challenges in the gas sector. The committee comprises: (i) Minister for Petroleum (Convener); (ii) Advisor to Prime Minister on Privatisation (Co-Convener); (iii) Lt. Gen. Muhammad Zafar Iqbal (Member); (iv) Secretary, Power Division (Member); and (v) Secretary, Petroleum Division (Member) The committee's Terms of Reference (ToRs) include: (i) developing a proposal to align LNG demand of the power sector with supply availability to prevent abrupt demand fluctuations; (ii) identifying causes and solutions for sudden changes in LNG demand that lead to diversion of cargoes; (iii) recommending measures to reduce circular debt in the gas sector; (iv) proposing a rationalized LNG tariff structure, revisiting terminal charges, importer margins, LNG service agreement fees; and (v) enhancing efficiency and transparency in domestic gas tariffs, including UFG (Unaccounted-for Gas) losses, especially with the growing share of LNG in the national gas system. The Power Division and the National Coordinator of the Task Force will deliver a detailed presentation on these issues to the Prime Minister. Separately, the Prime Minister has given the Power Division three months to complete a feasibility study on imported coal-fired power projects. Copyright Business Recorder, 2025
Business Recorder
20-05-2025
- Business
- Business Recorder
10-year power roadmap approved
ISLAMABAD: Prime Minister Shehbaz Sharif has directed the Power Division to continue efforts aimed at reducing electricity prices, eliminating circular debt and controlling line losses and theft, sources told Business Recorder. These directives were issued as the Prime Minister approved the Integrated Generation Capacity Expansion Plan (IGCEP) 2024–34, a long-awaited 10-year roadmap for Pakistan's power sector. The plan is expected to save $17 billion through rescheduling and cancellation of 7,967 MW of planned projects. The core objective of the IGCEP is to ensure the availability of affordable and reliable electricity. All new projects included in the plan have been selected based on the minimum-cost principle. PM approves 10-year IGCEP 2025–35 According to official estimates, the revised strategy is expected to reduce the national economic burden by Rs 474.3 billion and yield savings of approximately $10 billion (Rs 2,790 billion) by adjusting project timelines. An additional $7 billion (Rs 1,953 billion) in savings is projected by scrapping 7,967 MW of proposed projects. These changes are also expected to bring down electricity tariffs, with estimated average savings of more than Rs 2 per unit. Officials assert that — for the first time — electricity projects have been chosen purely on merit and in full transparency. Costly and unnecessary projects have been removed, with national interest prioritized over individual or political gain. 'The Power Division, through structural reforms, shall make continuous efforts to reduce the price of electricity, eliminate circular debt, control line losses and theft, and eradicate corruption in Discos,' the Prime Minister was quoted as saying. 'Renewable energy must be promoted to protect the climate and save foreign exchange currently spent on imported fossil fuels,' he added. Under the original IGCEP, 14,984 MW of new projects were planned. This has now been trimmed to 18 projects totaling 7,017 MW, including strategic hydropower projects such as Dasu and Mohmand Dams. Priority has been given to 7,987 MW of projects based on indigenous resources —hydropower, solar, nuclear, and wind — to reduce dependency on imported fuels like coal and natural gas, thereby saving billions in foreign exchange annually. The Ministry of Water Resources has been tasked with ensuring timely completion of strategic hydropower projects according to the Prime Minister's approved timelines. The Ministry must also ensure financial close of these projects and prevent any cost overruns. The Chairman of WAPDA has been directed to submit regular progress reports to the Prime Minister. Additionally, the Secretary Power, Secretary Petroleum, and Chairman of the Task Force have been instructed to resolve inter-ministerial and cross-cutting issues to ensure smooth operations and timely implementation. A high-level committee has also been constituted to oversee reforms in the petroleum sector. This committee will develop strategies to synchronize LNG demand with the power sector's requirements, address cargo diversion issues, and tackle circular debt and tariff challenges in the gas sector. The committee comprises: (i) Minister for Petroleum (Convener); (ii) Advisor to Prime Minister on Privatisation (Co-Convener); (iii) Lt. Gen. Muhammad Zafar Iqbal (Member); (iv) Secretary, Power Division (Member); and (v) Secretary, Petroleum Division (Member) The committee's Terms of Reference (ToRs) include: (i) developing a proposal to align LNG demand of the power sector with supply availability to prevent abrupt demand fluctuations; (ii) identifying causes and solutions for sudden changes in LNG demand that lead to diversion of cargoes; (iii) recommending measures to reduce circular debt in the gas sector; (iv) proposing a rationalized LNG tariff structure, revisiting terminal charges, importer margins, LNG service agreement fees; and (v) enhancing efficiency and transparency in domestic gas tariffs, including UFG (Unaccounted-for Gas) losses, especially with the growing share of LNG in the national gas system. The Power Division and the National Coordinator of the Task Force will deliver a detailed presentation on these issues to the Prime Minister. Separately, the Prime Minister has given the Power Division three months to complete a feasibility study on imported coal-fired power projects. Copyright Business Recorder, 2025
Business Recorder
09-05-2025
- Business
- Business Recorder
Reform or rhetoric?
EDITORIAL: That it took this long to inject merit and transparency into Pakistan's power sector is itself an indictment of decades of mismanagement. Still, Prime Minister Shehbaz Sharif's approval of the revised Indicative Generation Capacity Expansion Plan (IGCEP 2025–35) is a welcome departure from the rent-seeking, politically motivated decision-making that has long defined electricity planning in the country. By scrapping 7,967 megawatts of high-cost projects and rescheduling others, the government claims savings of USD 17 billion — a figure that underscores just how much waste was built into the old model. For years, the power sector has operated as a parallel economy — driven less by national interest and more by vested ones. The plan's pivot away from expensive, imported fuels and towards domestic and renewable sources is both logical and long overdue. It should never have required a crisis to realise that relying on costly generation while locking the state into capacity payments and sovereign guarantees was unsustainable. Yet that is precisely the legacy this reform effort must now overcome. On paper, the changes are sound. By cutting the original 14,984MW generation expansion target in half, and prioritising 7,987MW of projects based on local resources — hydro, wind, solar, and nuclear — the IGCEP marks a clear shift toward affordability, efficiency, and long-term sustainability. The commitment to ending the single-buyer model, eliminating capacity charges, and opening the door to competitive bidding are all necessary steps toward a functioning electricity market. But these steps should have been taken a decade ago. For too long, power projects were awarded on a cost-plus basis with little regard for actual need or affordability, producing a glut of idle capacity and rising tariffs for consumers. That culture of inefficiency and impunity was not a design flaw — it was the system. One can only hope that this latest attempt at reform does more than tinker at the margins. Also worth noting is the exclusion of K-Electric's renewable energy proposals from the IGCEP. While officials have justified the move by pointing to available alternatives like Thar coal and nuclear power near KE's system, it remains to be seen whether this exclusion will serve consumer interests in Karachi or simply reinforce old fault lines between the utility and federal planners. KE's instruction to set up its own time-line to access the National Grid might make technical sense, but it also reflects a persistent inability to integrate planning across jurisdictions. That the plan was revised only after a groundswell of concern — triggered by falling demand, surging net metering, and a growing stockpile of underutilised capacity — should serve as a cautionary tale. Officials now admit that previous iterations of the IGCEP were laden with projects that lacked even basic financial progress or construction benchmarks. That nearly 15,000MW of such 'committed' capacity has now been either cut or rescheduled only confirms how deeply flawed the planning process was. This is where the government's real test lies. Replacing megawatts is easy; replacing the culture that enabled poor planning and contractual exploitation is not. Corruption, inefficiency, and bureaucratic inertia continue to grease palms all the way to the top. If these reforms are to yield lasting benefits, they must be accompanied by structural discipline — regulatory clarity, professional independence, and a willingness to prosecute those who looted the sector under previous regimes. In the end, consumers want affordable, reliable power. Producers want clear rules and predictable returns. And the country needs a power sector that supports, not stifles, economic growth. The IGCEP 2025–35 offers a framework to move in that direction. Better late than never, so to speak. But if the same old habits resurface under a new cover, we may not get another chance to fix what's broken. Copyright Business Recorder, 2025
Business Recorder
07-05-2025
- Business
- Business Recorder
Ensuring Karachi's stake in national energy planning
It is often said — and increasingly heard in conversations with residents, business leaders, and industrial stakeholders — that Karachi does not receive the focus it deserves in national policymaking. While I have consistently defended the commitment of the Federal Government and policy institutions towards the city's development, recent developments call for a closer, more balanced examination. The Federal Cabinet's approval of the Integrated Generation Capacity Enhancement Plan (IGCEP) 2025–2035, under the leadership of Prime Minister Shehbaz Sharif, is a pivotal step for Pakistan's energy future. However, the exclusion of K-Electric's 640MW of competitively bid, investor-backed solar energy projects from the plan have raised valid concerns among stakeholders and residents of Karachi. This omission risks undermining years of coordinated work between regulators, investors, and the utility to diversify the city's energy mix and reduce dependence on the expensive fossil fuels as well as on the national grid — an objective previously encouraged by the federal government itself. Previously, K-Electric was asked to advance renewable energy generation under defined timelines. In response, the utility fully complied with the government's instructions and moved swiftly with competitive processes and regulatory compliance, submitting projects that promised clean, cost-effective power at scale. These included a 200MW solar project in Jhimpir, a 150MW hybrid site in Vinder Bela, and additional initiatives in collaboration with the Sindh Government. This move was backed by serious investor-backed proposals, Nepra approvals, and competitive bidding. But now, suddenly, everything has changed. In the strange logic of Pakistan's energy planning, spending hundreds of billions in subsidies is perfectly acceptable, so long as no one dares to bring cheaper electricity to the table. Take aside for a moment Karachi's interest and the rights of its residents, these renewable energy projects promise electricity at a fraction of current fuel costs. If implemented, they could save the government Rs. 10 to 15 billion annually in tariff differential subsidies and offer massive relief to Karachi's consumers through reduced fuel adjustment charges. A logical question asked by various decision makers: why should K-Electric be allowed to install more (cheaper generation) when the southern region of the country is already flooded with local coal, nuclear, wind, and solar? A simple answer would be transmission constraints. Even after the new interconnection at KKI Grid, the transmission capacity remains limited, and demand is expected to rise on the industrial side as well as domestic consumption will rise — but constraints will remain. This solar will exclusively benefit Karachi consumers without depending on national grid and transmission bottlenecks. This is something decision makers need to take into account. In addition to this, idle generation is mostly based on imported coal like Port Qasim, lucky, CPHGC, etc. if we compare 640MW renewables energy price with imported coal generation, renewables are cheaper even on EPP which will not just save foreign exchange but also reduce overall energy price basket. These projects were simply left out of the IGCEP, the national power development plan. Without IGCEP inclusion, NEPRA cannot approve them, and without approval, nothing gets built. Meanwhile, grid-based electricity continues to get more expensive, partly due to the unchecked spread of distributed rooftop solar and the rising fixed costs of maintaining a grid that fewer consumers are fully paying for. As a result, the government keeps issuing subsidy cheques, and consumers continue to receive inflated bills. This, despite the fact that Nepra already issued the RFPs, and KE successfully conducted Pakistan's first smoothly executed competitive bidding process, a landmark achievement in a sector where delays and cancellations are routine. If this process is now derailed, it will discourage future investment and damage the credibility of the government's own reform agenda. But then again, this isn't new for Karachi. In 2018, KE's proposal for a local coal-based plant was rejected. Instead, they were told to construct BQPS-III entirely on RLNG, one of the world's most volatile and relatively expensive fuels. That same year, their allocation of cheap indigenous gas was withdrawn, in direct violation of the Gas Allocation Policy of 2005 and its 2015 and 2018 amendments. That Cheap Indigenous gas was redirected to powerful captive power producers, forcing KE to rely exclusively on imported RLNG. The result? After the dollar spiralled out of control, KE's fuel cost per unit rose to Rs 26 to 28, while the same electricity could have been produced at Rs 7 per unit with domestic gas. The difference didn't disappear. It showed up as ballooning fuel adjustments for consumers and ever-growing subsidies. In fact, way above Rs 800 billion has been paid to KE in tariff differential subsidies from 2006 to 2025. To spur the city's social and economic growth now when KE is trying to shift to clean, local solar generation to bring down costs and reduce import dependence, the doors are quietly shut at the federal level. These projects should be part of the solution to the circular debt and foreign fuel addiction, yet they've been left out of the plan. Meanwhile, the government is directly or indirectly facilitating Net Metering, purchasing rooftop solar power at Rs. 27 per unit and even more costly, netting off units at retail rates. This means rooftop prosumers not only avoid buying power, they also bypass distribution margins, capacity payments, taxes, and other grid charges. The actual system loss per unit exceeds Rs. 27. But this gets a green light, while utility-scale solar that could serve millions of customers is sidelined. If rooftop solar is a revolution, then why is utility-scale solar somehow a threat? While being at this, K Electric has sufficient small plants to back up the impact of utility scale solar as baseload when the sun is not available. Credit must also be passed where it is due. The Minister for Power and his team have taken tangible steps to reduce industrial tariffs and streamline regulation, and they deserve appreciation. But ignoring KE's solar projects undermines their goal of supporting electricity customers of Karachi. The local leadership in Karachi clearly sees that these are not just solar driven clean energy power plants; they are in fact long-term investments in infrastructure for Karachi's sustainability, growth and resilience. It took three years to bring these projects from concept to competitive bidding. Investors placed aggressive bids. The resulting tariffs are a win for the government, KE, and most importantly the citizens and industries of Karachi. NEPRA has already gone through detailed documentation and issued RFPs. Backing out now will not do any favour to the government and decision makers but will send a message that Pakistan is open for window shopping, and not for serious investment and serious business. You would be forgiven for asking whether KE simply stepped on the wrong toes. Competitive bidding and low prices seem to threaten an ecosystem built on inefficiency. But what needed to be understood has already been understood. People of Karachi would believe that they are being penalized for proposing affordable solar power in a system that doesn't know what to do with it. Even the government's own 600 MW solar tender failed to attract a single bid. KE's investor-backed, technically sound projects stand ready, and yet they are being blocked not for being flawed, but for being too reasonable. And so, Karachi, the industrial engine of the country and the hub of the country's economic activities, is once again expected to survive but without access to its own cheaper electricity. If NTDC supply dips or gas allocations tighten again, as they often do, the city will return to high-cost generation. Fuel adjustments will skyrocket, and consumers of Karachi will pay the price for decisions made far from Karachi, and without a fair representation of Karachi. If rooftop solar at Rs. 27 per unit is reform, and unit-to-unit netting is somehow the future, then what exactly is Rs. 10 per unit utility-scale solar? Apparently, it's a problem. It seems that while America built a Department of Efficiency, we might be better served by establishing a Department of Common Sense. (The writer is an avid power sector expert and a leading industrialist from Karachi. He can be reached at [email protected]) Copyright Business Recorder, 2025
Business Recorder
05-05-2025
- Business
- Business Recorder
KP govt urges SIFC: Projects backed by Korean state-owned co must be added to IGCEP iteration
ISLAMABAD: The Khyber Pakhtunkhwa government has approached the Special Investment Facilitation Council (SIFC), urging it to ensure that proposed hydropower projects — backed by a Korean state-owned company — are included in the upcoming iteration of the Integrated Generation Capacity Expansion Plan (IGCEP) 2025–35. In a letter addressed to the Secretary of SIFC, Secretary Power Division, and the Chairman of Nepra, Shehryar Mehmood, Chief of the Public-Private Partnership Unit in KP's Planning & Development Department, emphasized the strategic importance of the 470 MW Lower Spat Gah Hydropower Project. The project, developed in partnership with Korea Hydro & Nuclear Power Co. Ltd. (KHNP), was initiated under the KP Hydropower Policy 2016 and aligned with the Federal Government's Power Generation Policy 2015. KHNP conducted a bankable feasibility study through internationally reputed consultants, received approval from PEDO's Panel of Experts (PoEs), and secured various regulatory NOCs from agencies including the Environmental Protection Agency, Forest Department, and IRSA. The company also established Special Purpose Companies (SPCs), deployed Korean expatriate staff, and applied for a generation license and feasibility-stage tariff from NEPRA. However, NEPRA returned both applications, citing that the project was not included in the currently approved IGCEP 2021–31. Despite NEPRA's earlier direction to the National Transmission & Despatch Company (NTDC) to consider the Lower Spat Gah HPP in the next IGCEP iteration, it was not included. The KP government noted that, despite SIFC's efforts to coordinate with the Power Division and NEPRA over the past several months, progress was hindered by investigations initiated by committees within the Power Division. Compounding the issue, the forthcoming IGCEP 2024–25 is reportedly being developed based on a low-demand scenario, and only public sector federal projects (WAPDA, GENCOs, PAEC) are being listed as 'committed,' sidelining private and provincial ventures regardless of their cost-effectiveness. 'The current approach fails to apply the least-cost planning principle and sets unrealistic COD targets for federal projects without proper due diligence,' stated the KP government in the letter. The provincial government underscored the strategic and economic value of the Lower Spat Gah project, which represents over $1 billion in foreign direct investment. The project, designed to generate energy below the national basket price, promises no additional burden on consumers and is in line with seasonal energy demand. Its clean, renewable output would not add to the country's idle generation capacity and aligns with national goals under the Sustainable Development Goals (SDGs) and Nationally Determined Contributions (NDCs). Given the project's remote, flood-prone location, the KP government argues that such investment would catalyze infrastructure development, create jobs, and contribute to energy security by serving as a peaking power plant that complements intermittent solar and wind sources. Moreover, retiring expensive thermal power plants in the coming years increases the urgency for base-load renewable energy options. KP officials also highlighted that the sponsors have invested considerable time, effort, and capital since 2018 under prevailing policy frameworks. Abruptly shelving the project at this advanced stage—without adherence to policy commitments—would send a negative signal to international investors and damage Pakistan's credibility. The KP government has formally requested SIFC's intervention to ensure that this foreign direct investment project is considered under applicable federal policies and included in the new IGCEP. 'This will not only benefit our province,' the letter concludes, 'but also significantly contribute to Pakistan's energy landscape.' Copyright Business Recorder, 2025
