Latest news with #IndicativeGenerationCapacityExpansionPlan
Business Recorder
21-07-2025
- Business
- Business Recorder
Fatemi upset over missed Nepra chief-Korean team meeting
ISLAMABAD: Special Assistant to the Prime Minister on Foreign Affairs, Syed Tariq Fatemi, has expressed serious displeasure to the concerned authorities including Power Division for failing to arrange a scheduled meeting between the Chairman of NEPRA and a visiting Korean energy delegation despite ongoing efforts by Korea South-East Power Co. Ltd. (KOEN) to secure inclusion of its hydropower projects in the Indicative Generation Capacity Expansion Plan (IGCEP) 2025–35. Well-placed sources told Business Recorder that Fatemi, who also oversees foreign investment facilitation, formally conveyed his concerns after the delegation's high-level engagements with various federal institutions, including the Power Division, the Ministry of Foreign Affairs, and the Special Investment Facilitation Council (SIFC), ended without a crucial interaction with NEPRA's top official. The KOEN delegation emphasized its long-standing commitment to Pakistan's power sector and flagged continued regulatory delays as a key impediment to foreign direct investment. Its two major hydropower projects—229.4 MW Asrit-Kedam and 238 MW Kalam-Asrit—have been in limbo for over three years despite completing all policy and regulatory milestones under the Power Generation Policy 2015. Projects 'ineligible' under IGCEP: PD not ready to lend a helping hand to Korean firms Sources said the delegation raised particular concern about the prolonged non-determination of tariffs, even though NEPRA had admitted the petitions in 2022 and the projects were optimized in the IGCEP 2022–31. The uncertainty, they noted, makes it increasingly difficult to maintain a $1 billion investment commitment in the absence of regulatory clarity. As a show of flexibility, KOEN offered to adjust the commercial operation timelines for both projects in view of the country's current power overcapacity—on the condition that NEPRA fulfills its legal obligation to determine tariffs without further delay, in compliance with orders from the NEPRA Appellate Tribunal. In a letter to Deputy Prime Minister and Foreign Minister Ishaq Dar, KOEN's Branch Manager Park Changhark reaffirmed the company's desire to invest in Pakistan's clean energy future. He reiterated KOEN's focus on delivering 'reliable, cost-effective, and environmentally responsible' energy solutions aligned with the Government of Pakistan's development vision. KOEN, a state-owned entity, first entered the Pakistani market with the 102 MW Gulpur Hydropower Project, commissioned in 2015 at a cost of $350 million. The project remains a model of successful public-private energy collaboration. Inspired by Gulpur's success, KOEN launched the two larger hydropower initiatives in 2017–18, with a combined estimated investment of $1 billion. According to the company, nearly $20 million has already been spent on detailed feasibility studies, obtaining all required No Objection Certificates (NOCs), and securing generation licenses. Despite this, the projects have remained stalled since June 2022 due to inaction on tariff petitions. 'Our relentless efforts have not yet translated into progress, and we are seeking clarity on the regulatory delays,' said Park. Sources added that Fatemi, in his official capacity advising on foreign investment-related issues, has written to all relevant ministries and agencies involved in the delegation's visit to flag the lack of coordination and missed opportunity. The incident has raised broader concerns about the treatment of credible foreign investors and the consistency of Pakistan's investment facilitation mechanisms. Copyright Business Recorder, 2025
Business Recorder
14-07-2025
- Business
- Business Recorder
KP asks centre to retain its two HPPs on IGCEP 2025-35
PESHAWAR: The KP government has asked the federal government to retain its two public sector energy projects i.e. Madyan Hydropower Project and Gabral Kalam HPP on Indicative Generation Capacity Expansion Plan (IGCEP 2025-35) prepared by the ISMO (System Operator). For this purpose, the Special Assistant to KP Government on Energy and Power Department, Tariq Saddozai has written a formal letter to the Federal Minister for Energy and Power, Sardar Owais Ahmad Leghari. The content of the letter said that the provincial government has expressed surprise over the unilateral altering of the criteria for 'committed projects' in IGCEP 2025-35 that has resulted in the exclusion of the KP government's projects. It said that as per the National Energy (NE) Plan, all projects declared committed under approved IGCEP 2021 shall be included as committed projects in subsequent iterations of the IGCEP. Therefore, the exclusion of the said projects is clearly in contravention of the NE Plan approved by the federal government pursuant to the NEPRA Act, 1997. It said that the revised criteria introduced by System Operator is contrary to the earlier prescribed approved criteria. The system operator cannot revise the criteria for committed projects during the currency of the current NE Plan. Furthermore, the retrospective application of such revised criteria is also contrary to the law as it amounts to changing the goal post during the game. Once a project is recognized and declared as committed project, it cannot be revaluated afresh through subsequent iterations and the revised criteria shall be applicable to the new projects that were not earlier present, not iterated projects or where the committed projects have been abandoned. Even the delays in the committed projects do not justify their exclusion rather the timelines for the commercial operations date are to be adjusted. It has further stated that the KP government projects have already demonstrated considerable physical and financial progress after attaining the status of 'Committed Projects' pursuant to the earlier IGCEPs. In consequence thereof, the KP government had also secured Generation Licenses from NEPRA, creating a vested right. Moreover, the provincial government also understand that once the project are declared committed, the criteria of least-cost, cannot be applied retrospectively to their further processing in their development cycle. Notwithstanding, the KP projects despite achievement of the status of 'Committed Projects' have been subjected to least-costs evaluation under the draft IGCEP 2025-35, which is contrary to the constitutional, statutory and regulatory framework. It has also highlighted that public sector projects of the federal government, previously declared as committed, namely Mohmand Dam, Dasu, Tarbela Extension-5 etc, continue to remain as committed in the draft IGCEP 2025-35. In stark contrast, the government of Khyber Pakhtunkhwa's 'Committed Projects' namely Madyan and Gabral-Kalam HPPs, have been excluded, which demonstrates discriminatory approach of the system operator which should accord equal treatment to the federal and provincial power projects developed through the public funds. On one hand the KP government projects have been approved by the federal government through the ECNEC of the Planning Commission and on the other hand, the system operator which is owned and controlled by the federal government is not recognizing the approval granted by the federal government. It further stated that the provincial government has secured concessional financing from the multilateral lender, that is, the World Bank through the Economic Affairs Division of the federal government, through multilateral lending framework, which is signed and guaranteed by the federal government in respect of loans extended by the World Bank to the province. The exclusion of KP projects would undermine this window of multilateral lending and would expose the government of Pakistan to the cancellation of loan/ lending and recovery of the financing charges, winding up costs, breakage costs, commitment fees etc. The exclusion will further prevent future lending to development projects in general and power projects in particular in KP beside giving highly negative signal to the current and potential investors in the province. Thus, the system operator being an entity of the federal government is failing to recognize the financing arrangement, for the development of the power projects, which financing has been incepted, financing and closed with the approval of the federal government. In light of the mentioned facts, grounds and circumstances, the KP government has requested the federal government to retain the projects of Madyan HPP and Gabral Kalam HPP as 'Committed Projects' in the IGCEP 2025-35; not allowing the System Operator to alter, modify, deviate or revise the criteria for inclusion of projects in the IGCEP in contravention of NE Plan, those approved unanimously by the Council of Common Interests vide its decision No. 2(8)/2021 CCI (48) dated September 13, 2021. 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
02-05-2025
- Business
- Business Recorder
PM approves 10-year IGCEP 2025–35
ISLAMABAD: Prime Minister Shehbaz Sharif has approved Pakistan's long-awaited 10-year Indicative Generation Capacity Expansion Plan (IGCEP 2025–35), which is expected to save $17 billion through the rescheduling and removal of 7,967 MW worth of projects. However, renewable energy projects (solar, wind, and hybrid) proposed by K-Electric (KE) have not been included in the IGCEP 2025–35. KE has instead been instructed to establish its own tie-line (grid station) to receive electricity from the National Grid. 'Generation from Thar and nuclear power is available near KE's system, and KE can use this to meet its needs. We have done justice with everyone without any discrimination,' said an official on condition of anonymity. The primary objective of the plan is to ensure affordable and reliable electricity for the public. New projects have been selected based on a minimum-cost principle. The national economic burden is expected to reduce by Rs 474.3 billion, while a national saving of $10 billion (Rs 2,790 billion) has been achieved by rescheduling project completion dates. According to the government, an additional $7 billion (Rs 1,953 billion) in savings came from dropping 7,967 MW of planned projects. These changes are also expected to reduce electricity tariffs, with an estimated average saving of more than Rs 2 per unit. Officials claim that, for the first time, electricity projects have been selected purely on merit and with full transparency. The plan prioritizes national interest over individual or political gains, cancelling expensive and unnecessary projects. Under the original IGCEP, 14,984 MW of new projects were proposed. This has now been scaled back to 18 projects totaling 7,017 MW, including Dasu and Mohmand dams. Preference has been given to 7,987 MW of projects based on local resources such as hydro, solar, nuclear, and wind, reducing dependence on imported fuels like coal and gas — a move expected to save billions in foreign exchange annually. Future power projects will be procured through competitive bidding, with a strong emphasis on private sector participation. The government will no longer purchase surplus electricity, provide sovereign guarantees for new projects, or pay capacity charges on unused generation. 'This IGCEP will ensure a cheap, sustainable, and merit-based electricity supply, which will ultimately bring down prices and benefit the country,' said official sources. They added that strategic projects may be allowed provided their additional costs (Least Cost Violation or LCV) are calculated and borne by the sponsoring agency. For example, Chashma-5 (C-5) was evaluated using the LCV methodology and selected with an LCV of $0.079 billion in FY 2032. However, it was later optimized for commissioning in FY 2038 without any LCV payment. As per the National Electricity Plan 2023–27, LCV costs will apply only for the first six years of operation (FY 2032–37), totaling Rs 14 billion (including financing costs), to be paid in 12 semi-annual installments of Rs 1.17 billion each. Sources confirmed that the IGCEP will continue to be refined before its final submission to NEPRA, with savings and LCV calculations subject to further review and stakeholder consultation. The System Operator (NPCC) submitted the draft IGCEP to NEPRA in April 2024. The plan came under significant scrutiny due to emerging sectoral dynamics — including falling electricity demand, increasing net metering, and a backlog of committed capacity additions — all of which raised concerns about the future cost burden on consumers. The draft IGCEP 2024–34 included 25,973 MW of new capacity, of which 25,573 MW (98.5%) was classified as committed, leaving only 400 MW (1.5%) as candidate capacity open for optimization. The plan had a Net Present Value (NPV) of $64.30 billion, comprising $42.61 billion in fixed costs and $21.69 billion in generation costs. Given the heavy reliance on committed projects and declining demand, a detailed review of the criteria for committed capacity was conducted. Of the 73 projects initially classified as committed in the IGCEP 2021–31 (totaling 22,418 MW), 7,434 MW had been commissioned by end-2024. The remaining 14,984 MW were re-evaluated based on updated criteria, which include: (i) for private power producers: achieving financial close and; (ii) For public projects: (a) financial commitments secured: (b) construction progress above 10%, and (c) financial progress exceeding 10%. Copyright Business Recorder, 2025
Business Recorder
01-05-2025
- Business
- Business Recorder
Pakistan plans to save $17bn by removing high-cost energy projects under revised IGCEP
The government intends to save Rs4,743 billion (USD17 billion) by excluding 7,967MW of high-cost energy projects and adjusting project completion timelines under the upcoming Indicative Generation Capacity Expansion Plan (IGCEP) 2024-2034, the Prime Minister's Office (PMO) said on Thursday. According to a press release issued by the PMO, the decision was made during a meeting chaired by Prime Minister Shehbaz Sharif in Islamabad to discuss the reduction of electricity tariffs and implementing sustainable reforms in the energy sector, focusing on the IGCEP. Under the IGCEP, the government aims to prioritise local resources and alternative energy sources like solar, nuclear, and hydropower over imported fuels, which is expected to save Pakistan several billion dollars in foreign exchange reserves. The government also aims to gradually phase out capacity payments to power generation companies, added the statement. During the meeting, PM Shehbaz noted that after a recent reduction of approximately Rs7.50 per unit in electricity rates, the government is committed to pursuing an effective strategy for sustainable energy sector reforms to provide further relief to the public. Small renewable energy projects in IGCEP: HEPA seeks PM's support for inclusion The prime minister directed relevant authorities to expedite the completion of key projects, including the Diamer Bhasha Dam, to ensure effective systems for energy production and water storage in the country. 'Any delay in the completion of energy projects is unacceptable,' he emphasised. The prime minister also announced that a free market for electricity generation will be established in the near future. 'The creation of this market will enable competitive power supply, leading to more sustainable electricity availability and further reduction in tariffs,' PM Shehbaz was quoted as saying in the statement. During the meeting, the prime minister was briefed on ongoing reforms in the energy sector. Upon the PM's instruction, a re-evaluation of the IGCEP revealed that there was room for further improvement. The Task Force subsequently revised the plan to better align with ground realities and future needs. The briefing added that for the next ten years, the IGCEP paves the way for power projects to be awarded through competitive bidding and electricity to be sold at the lowest possible price. The meeting was attended by Minister for Power Sardar Awais Leghari, Minister for Economic Affairs Ahad Khan Cheema, Minister for Information Attaullah Tarar, Minister for Petroleum Ali Pervaiz Malik, and senior officials from relevant institutions.
