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Business Recorder
2 days ago
- Business
- Business Recorder
Failure to achieve financial close: Two key CPEC hydropower projects excluded from IGCEP
ISLAMABAD: The government has excluded two major China-Pakistan Economic Corridor (CPEC) hydropower projects — totalling 1,824 MW and valuing $4 billion — from the Indicative Generation Capacity Expansion Plan (IGCEP) 2025–35, citing failure to achieve financial closure. 'We have excluded the 1,124 MW Kohala Hydropower Project and the 700.7 MW Azad Pattan Hydropower Project from the IGCEP till 2034, along with other private sector projects,' revealed Federal Minister for Power, Sardar Awais Khan Leghari, while briefing the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz. The committee witnessed heated debate on non-inclusion of the 207 MW Madyan and 88 MW GabralKalam hydropower projects. Brig Tariq Saddozai (Retd), Special Assistant to the Chief Minister of Khyber Pakhtunkhwa (KPK) on Energy and Power, argued that both projects were included in the previous IGCEP as committed projects. He stated that despite meeting the criteria set by the Council of Common Interests (CCI) in 2021—and being protected under the National Electricity Plan 2023–27—the projects were removed from the latest IGCEP. He added that the provincial government had already invested Rs 14 billion in land and infrastructure for the projects. Saddozai claimed the federal government had 'moved the goalposts,' resulting in the exclusion of KPK's projects from the IGCEP 2025– and the Power Secretary maintained that both World Bank-funded projects had not signed binding contracts and did not qualify under the least-cost project criteria. They clarified that the IGCEP must be approved by the National Electric Power Regulatory Authority (NEPRA) following a public hearing, during which all affected projects can present their cases. CPEC hydropower project achieves hoisting of last rotor in Mansehra While the Power Division rejected KPK's arguments, it agreed to hold further discussions with the provincial government. During the discussion on the interim Net Hydel Profit (NHP) arrangement, Rehmat Akhtar, CEO of the Central Power Purchasing Agency–Guaranteed (CPPA-G), confirmed a payment of Rs 1.10/kWh to KPK, with a 5% annual indexation. He said CPPA-G is currently making payments to WAPDA for onward distribution to both KPK and Punjab. He also noted that the Rs 1.10/kWh rate, including 5% annual indexation from 2016, is being recovered from consumers. Outstanding payments of Rs 40 billion under NHP have already been accepted. Once the determinations for FY2023–24 and FY2024–25 are finalized, the NHP rate will increase to Rs 1.70/kWh. The KPK government claimed its outstanding dues total Rs 76 billion, while WAPDA maintained the amount is Rs 63 billion. The Committee Chairman recommended increasing NHP monthly payments to Rs 5 billion, up from the current Rs 3–4 billion, and proposed that payments be routed through CPPA-G instead of WAPDA. It was decided that an internal meeting at the Ministry level would be convened to finalize the proposed NHP payment mechanism. On the issue of wheeling charges (Use of System Charges – UoSC), the Power Minister informed the committee that the Cabinet Committee on Energy (CCoE) has approved wheeling charges at Rs 12.55/kWh, excluding stranded costs—one of the major factors behind previous higher rates. The Cabinet ratified the decision. Initially, an allocated capacity of 800 MW will be made available for competitive bidding. The highest bidder will be granted access to wheel electricity. The committee lauded the Power Minister and his team for addressing the wheeling charges issue and for achieving a Rs 190 billion reduction in losses incurred by the power distribution companies (Discos). Meanwhile, according to a press release issued by the Senate Secretariat, Federal Minister for Power Awais Ahmad Leghari clarified that KP authorities did not fully present the CCI-approved power policy, and citing a single clause without context was misleading. He added that if these projects were included, electricity prices could rise by Rs6 per unit by 2034. The Power Division, he said, had removed 8,000 to 10,000 MW worth of projects from the plan — including several CPEC power projects — to protect the public from expensive electricity. The minister further informed the committee that the government had terminated agreements with five IPPs and renegotiated others, resulting in an estimated saving of Rs3.4 trillion over the next four to five years. This year alone, distribution company (DISCO) losses were reduced by Rs191 billion. He acknowledged the persistent problem of electricity theft but noted that the target for establishing a competitive market had been achieved, freeing the government from mandatory power purchases. The committee also deliberated on captive power plants, costly imported coal and LNG projects, and the tariff structure for the protected category. The chairman committee called for a review of the protected category policy. Secretary Power Division confirmed that a reassessment is underway and that consumers using up to 200 units are receiving subsidies. The chairman urged the federal minister to introduce multiple slab rates to protect the consumers from a sudden high jump in tariff. Senator Mohsin Aziz urged both the federal and provincial governments to revisit the matter so that these KP projects could be completed, benefiting both the province and the country. Copyright Business Recorder, 2025
Express Tribune
2 days ago
- Business
- Express Tribune
K-P hydropower projects dropped from national plan
The Senate Standing Committee on Power met at Parliament House under the chairmanship of Senator Mohsin Aziz. According to an official statement released on Monday, the committee discussed the 207 MW Madyan and 88 MW Gabral hydropower projects and other energy initiatives. The Special Assistant to the Khyber-Pakhtunkhwa (K-P) Chief Minister on Energy said land worth Rs5 billion had been purchased for the projects, and physical and financial progress had been made. However, the federal government removed them from the Indicative Generation Capacity Expansion Plan (IGCEP) list. Federal Minister for Power Awais Ahmad Leghari said K-P authorities had not fully presented the Council of Common Interests (CCI)-approved power policy. Citing one clause without context was misleading, he added. Inclusion of these projects could raise electricity prices by Rs6 per unit by 2034. The minister said the Power Division removed 8,00010,000 MW of projects from the plan, including some China-Pakistan Economic Corridor (CPEC) power projects, to shield consumers from expensive electricity. The government had also terminated agreements with five Independent Power Producers (IPPs) and renegotiated others, saving an estimated Rs3.4 trillion over four to five years. He said DISCO losses were reduced by Rs191 billion this year. Electricity theft remained a challenge, but the competitive market target had been achieved, ending mandatory government power purchases. The committee reviewed captive power plants, costly imported coal and LNG projects, and tariffs for the protected category. The chairman called for revising the protected category policy. Secretary Power Division confirmed a review was underway and that consumers using up to 200 units received subsidies. Aziz urged the introduction of multiple slab rates to prevent sudden tariff hikes. The committee also discussed Net Hydel Profit (NHP). NEPRA officials said payments were being made to provinces, but K-P representatives called them too low and accumulating. The committee recommended clearing the backlog and paying at least Rs5 billion monthly to K-P. The chair directed that a meeting be held and a report submitted within a week. On wheeling charges, the minister said NEPRA rules had been amended and approved by the Cabinet, reducing the standard Rs28 rate to a Rs12 base rate. The proposal now awaits NEPRA's final approval. Aziz raised concerns over the return on investment (ROI) of IPPs, with some projects showing ROIs as high as 100%. NEPRA officials attributed this to dollar-based payments. The committee asked NEPRA to provide the last five balance sheets of these power plants for review in the upcoming meeting.
Business Recorder
3 days ago
- Business
- Business Recorder
Federal govt and provinces: Senate body seeks ‘out of box' fix for NHP dispute
ISLAMABAD: The Senate Standing Committee on Power headed by Senator Mohsin Aziz is scheduled to meet on Monday (today) to find out an 'out of box' solution on the dispute on Net Hydel Profit (NHP) between Federal Government and provinces, particularly Khyber Pakhtunkhwa. The Water and Power Development Authority (WAPDA) has reportedly distanced itself from the proposal of out of box solution of current controversy on NHP. Minister for Planning, Development and Special Initiative, Ahsan Iqbal is also heading a committee on this issue. Ministry of Energy (Power Division) is represented by the CEO of CPPA-G and the MD of PPMC The Committee has convened five meetings attended by the representatives of all four Provinces, the Ministry of Energy (Power Division), the Finance Division. Further update on the finalisation may be shared by the Ministry of IPC. KP formulates strategy aimed at recovering NHP dues According to WAPDA, the Council of Common Interests (CCI) based on Article 161(2) of the Constitution determines the sale rate at Bus Bar of hydel power stations. However, calculating NHP has been tricky due to conflicting claims and interpretations of the Kazi Committee Methodology. Various attempts have been made to resolve this, including ad-hoc payments and arbitration, but a long-term solution remains unresolved. After power sector restructuring and becoming NEPRA licencee, WAPDA paid Rs. 6 billion annually to the Govt, of KP as NHP until FY 2014-15, which was later uncapped at Rs 1.10 per kWh by NEPRA in FY 2015-16, following GoKP's request for settlement of all previous NHP arrears by making payments of Rs.70 billion in four installment and notification of uncapped NHP rate of Rs 1.10/kWh-an MoU was signed between Govt of Pakistan and Govt. of KP on February 25, 2016. The MoU was also approved by CCI on February 29, 2016 and later the settlement of Govt of Punjab's claims of Rs.82.71 billion and payment of regular NHP at uncapped rate was also agreed and approved by CCI on December 16, 2016. Despite paying NHP at the uncapped rate that was further enhanced by NEPRA from Rs.1.10/kWh to Rs.1.155/kWh in FY 2017-18 and CCI's overriding of its earlier decision of Jan 1991 regarding KCM through approving the said MoU, the GoKP again raised the issue in CCI and asked for payment of NHP as per KCM. WAPDA argues that considering Deputy Chairman, Planning Commission's report (suggesting WAPDA's replacement with CPPA-G for NHP obligations), ECC's decision of January 24, 2019 (Power Division to lead efforts to secure financing for NHP payments to provinces) and Finance Minister's remarks during 49th CCI meeting (Finance Division is working on clearing NHP outstanding dues of KPK and Punjab, and in future CPPA-G will directly pay NHP to provinces), the Power Division and CPPA-G are in better position to propose an out of box solution for NHP payment . WAPDA doesn't profit from selling power at hydel stations, as NHP is a pass through item and makes the NHP payment to provinces as per government guidelines and regulations. WAPDA's outstanding recovery from CPPA-G against power sales invoices has sharply increased due to delayed payments, hindering WAPDA's ability to make timely NHP payments to provinces, despite regular billing at NEPRA-determined rates. Currently, WAPDA has to pay NHP of Rs.49.565 billion to GoKP and Rs. 114.584 billion (including Rs. 13.617 billion as NHP arrears) to GoPb. WAPDA maintains that Power Division and CPPA-G are in better position to propose an out of box solution for NHP payment. Power Division (Power Planning & Monitoring Company): PPMC has offered the following comments: (i) Article 161(2) of Pakistan's 1973 Constitution requires that net profits from hydroelectric power generation be paid to the province where the power station is located, calculated by deducting operating expenses from bus bar revenue, and explicitly excludes Net Hydel Profit (NHP) as a pass-through cost to electricity consumers ;(ii) KCM calculates NHP by aggregating power generation income, but this approach, formulated in 1985-86 was based on a unified and unbundled WAPDA being the sole power producer and distributor. Now, Pakistan's energy landscape has changed significantly including WAPDA's unbundling, emergence of IPPS, and shifts in the power mix wherein hydro power contributes 27% (approx.) ;(iii) NHP payments should be made through the federal budget or covered by WAPDA's profits from hydropower sales, rather than consumers; (iv) commenting on GoKP's proposal, PPMC is of the view that the transfer of hydropower plants to provinces is governed by the Power Generation policies of 1995 and 2015 that is applicable to BOOT-based IPP projects developed within a province by private sponsors. The WAPDA Act lacks provisions for transferring hydropower plants constructed under its mandate to the provinces, and its projects are primarily financed through PSDP, donor loans, and internal funds, after accounting for NHP; (v) NHP payment through ESCROW account, does not align with the legal and regulatory framework and the constitutional scheme. Regarding wheeling of power from PEDO and wheeling charges determination, B2B electricity supply through wheeling arrangements will be integrated into IGCEP and TSEP under the CTBCM Directive No. 7. NEPRA's periodical regime, determined water usage charges should be reviewed based on the mechanism applied in various countries. Government of Sindh: The Provincial Government submitted proposal regarding transferring Hydro Electric Stations to the respective provinces in lieu of NHP requires clarification as presently no hydro power station is managed in IPPs mode. It further stated that the hydro-electric power generation is a bi-product of 'Water Reservoir Projects (Dams)'. While framing any such proposal, the basic purpose of construction of these reservoirs be considered and IRSA be included in the committee. Govt of Sindh further contended that transfer of Hydro Electric Stations to provinces requires careful consideration of the primary purpose of water reservoir projects. To ensure a comprehensive approach, it is suggested to include representatives from IRSA, Finance Division, and Economic Affairs Division in the committee to provide technical, financial, and economic expertise. Govt of Sindh has reiterated its earlier stance on NHP, reflected in the minutes of 49th CCI meeting which is as follows; 'Chief Minister, Punjab endorsed views of DCPC and asked for early payment of Rs. 58 billion dues of NHP owned to Punjab. The Chief Minister, Sindh, endorsed the NHP claim of Chief Ministers of Khyber Pakhtunkhwa and Punjab being constitutional. He, however, did not support increase in tariff and its passing on to consumers. He said that since profit was utilized by WAPDA it should now be accounted for'. Copyright Business Recorder, 2025
Business Recorder
3 days ago
- Business
- Business Recorder
Federal government and provinces: Senate body seeks ‘out of box' fix for NHP dispute
ISLAMABAD: The Senate Standing Committee on Power headed by Senator Mohsin Aziz which is scheduled to meet on Monday (today) to find out an 'out of box' solution on the dispute on Net Hydel Profit (NHP) between Federal Government and provinces, particularly Khyber Pakhtunkhwa. The Water and Power Development Authority (WAPDA) has reportedly distanced itself from the proposal of out of box solution of current controversy on NHP. Minister for Planning, Development and Special Initiative, Ahsan Iqbal is also heading a committee on this issue. Ministry of Energy (Power Division) is represented by the CEO of CPPA-G and the MD of PPMC The Committee has convened five meetings attended by the representatives of all four Provinces, the Ministry of Energy (Power Division), the Finance Division. Further update on the finalisation may be shared by the Ministry of IPC. KP formulates strategy aimed at recovering NHP dues According to WAPDA, the Council of Common Interests (CCI) based on Article 161(2) of the Constitution determines the sale rate at Bus Bar of hydel power stations. However, calculating NHP has been tricky due to conflicting claims and interpretations of the Kazi Committee Methodology. Various attempts have been made to resolve this, including ad-hoc payments and arbitration, but a long-term solution remains unresolved. After power sector restructuring and becoming NEPRA licencee, WAPDA paid Rs. 6 billion annually to the Govt, of KP as NHP until FY 2014-15, which was later uncapped at Rs 1.10 per kWh by NEPRA in FY 2015-16, following GoKP's request for settlement of all previous NHP arrears by making payments of Rs.70 billion in four installment and notification of uncapped NHP rate of Rs 1.10/kWh-an MoU was signed between Govt of Pakistan and Govt. of KP on February 25, 2016. The MoU was also approved by CCI on February 29, 2016 and later the settlement of Govt of Punjab's claims of Rs.82.71 billion and payment of regular NHP at uncapped rate was also agreed and approved by CCI on December 16, 2016. Despite paying NHP at the uncapped rate that was further enhanced by NEPRA from Rs.1.10/kWh to Rs.1.155/kWh in FY 2017-18 and CCI's overriding of its earlier decision of Jan 1991 regarding KCM through approving the said MoU, the GoKP again raised the issue in CCI and asked for payment of NHP as per KCM. WAPDA argues that considering Deputy Chairman, Planning Commission's report (suggesting WAPDA's replacement with CPPA-G for NHP obligations), ECC's decision of January 24, 2019 (Power Division to lead efforts to secure financing for NHP payments to provinces) and Finance Minister's remarks during 49th CCI meeting (Finance Division is working on clearing NHP outstanding dues of KPK and Punjab, and in future CPPA-G will directly pay NHP to provinces), the Power Division and CPPA-G are in better position to propose an out of box solution for NHP payment . WAPDA doesn't profit from selling power at hydel stations, as NHP is a pass through item and makes the NHP payment to provinces as per government guidelines and regulations. WAPDA's outstanding recovery from CPPA-G against power sales invoices has sharply increased due to delayed payments, hindering WAPDA's ability to make timely NHP payments to provinces, despite regular billing at NEPRA-determined rates. Currently, WAPDA has to pay NHP of Rs.49.565 billion to GoKP and Rs. 114.584 billion (including Rs. 13.617 billion as NHP arrears) to GoPb. WAPDA maintains that Power Division and CPPA-G are in better position to propose an out of box solution for NHP payment. Power Division (Power Planning & Monitoring Company): PPMC has offered the following comments: (i) Article 161(2) of Pakistan's 1973 Constitution requires that net profits from hydroelectric power generation be paid to the province where the power station is located, calculated by deducting operating expenses from bus bar revenue, and explicitly excludes Net Hydel Profit (NHP) as a pass-through cost to electricity consumers ;(ii) KCM calculates NHP by aggregating power generation income, but this approach, formulated in 1985-86 was based on a unified and unbundled WAPDA being the sole power producer and distributor. Now, Pakistan's energy landscape has changed significantly including WAPDA's unbundling, emergence of IPPS, and shifts in the power mix wherein hydro power contributes 27% (approx.) ;(iii) NHP payments should be made through the federal budget or covered by WAPDA's profits from hydropower sales, rather than consumers; (iv) commenting on GoKP's proposal, PPMC is of the view that the transfer of hydropower plants to provinces is governed by the Power Generation policies of 1995 and 2015 that is applicable to BOOT-based IPP projects developed within a province by private sponsors. The WAPDA Act lacks provisions for transferring hydropower plants constructed under its mandate to the provinces, and its projects are primarily financed through PSDP, donor loans, and internal funds, after accounting for NHP; (v) NHP payment through ESCROW account, does not align with the legal and regulatory framework and the constitutional scheme. Regarding wheeling of power from PEDO and wheeling charges determination, B2B electricity supply through wheeling arrangements will be integrated into IGCEP and TSEP under the CTBCM Directive No. 7. NEPRA's periodical regime, determined water usage charges should be reviewed based on the mechanism applied in various countries. Government of Sindh: The Provincial Government submitted proposal regarding transferring Hydro Electric Stations to the respective provinces in lieu of NHP requires clarification as presently no hydro power station is managed in IPPs mode. It further stated that the hydro-electric power generation is a bi-product of 'Water Reservoir Projects (Dams)'. While framing any such proposal, the basic purpose of construction of these reservoirs be considered and IRSA be included in the committee. Govt of Sindh further contended that transfer of Hydro Electric Stations to provinces requires careful consideration of the primary purpose of water reservoir projects. To ensure a comprehensive approach, it is suggested to include representatives from IRSA, Finance Division, and Economic Affairs Division in the committee to provide technical, financial, and economic expertise. Govt of Sindh has reiterated its earlier stance on NHP, reflected in the minutes of 49th CCI meeting which is as follows; 'Chief Minister, Punjab endorsed views of DCPC and asked for early payment of Rs. 58 billion dues of NHP owned to Punjab. The Chief Minister, Sindh, endorsed the NHP claim of Chief Ministers of Khyber Pakhtunkhwa and Punjab being constitutional. He, however, did not support increase in tariff and its passing on to consumers. He said that since profit was utilized by WAPDA it should now be accounted for'. Copyright Business Recorder, 2025
Business Recorder
03-07-2025
- Business
- Business Recorder
Crypto mining, other sectors: IMF rejects Pakistan's subsidised power tariffs proposal
ISLAMABAD: The International Monetary Fund (IMF) has rejected Pakistan's proposal to offer subsidised electricity tariffs to crypto mining and certain industrial sectors, warning that such moves would create new complications in the already strained power sector. Testifying before the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz, Secretary Power Dr Fakhray Alam Irfan stated that all major power sector initiatives must be cleared by the IMF. He noted that although Pakistan has surplus electricity, particularly in winter months, the IMF is cautious about any pricing mechanisms that could distort the market. In September 2024, the Power Division proposed a six-month incremental consumption package (October–March) at marginal cost (Rs 23/kWh), based on last year's usage. However, after two months of discussion, the IMF only approved a three-month version, citing potential market distortions. The curious case of Bitcoin mining in Pakistan In a subsequent plan shared in November 2024, the Power Division suggested a targeted marginal cost-based package (Rs 22–23/kWh) for energy-intensive industries such as copper and aluminium melting, data centers, and crypto mining, arguing it would boost consumption of surplus electricity and reduce capacity charges. Still, the IMF rejected the proposal, stating it resembled sector-specific tax holidays that have historically created imbalances. 'As of now, the IMF has not agreed,' Dr Irfan confirmed, adding that the plan is also under review by the World Bank and other development partners. He emphasised that the government has not withdrawn the proposal and remains engaged with international institutions to refine it. During the session, a heated debate also emerged on the government's recent agreement with scheduled banks to reduce the circular debt stock of Rs 1.275 trillion. Senator Shibli Faraz criticised the deal, stating that banks were 'forced at gunpoint' to offer the loans. 'If I were a banker, I would have refused,' he said, warning that the burden would fall on consumers through future levies. Secretary Power rebutted this claim, clarifying that no new levies have been imposed. He stated that the existing Debt Servicing Surcharge (DSS) of Rs 3.23/kWh will continue for the next five to six years to recover the amount. He also highlighted that circular debt inflows have been reduced through timely subsidy injections. On consumer facilitation, Dr Irfan reported that over 500,000 people have downloaded the 'Apna Meter Apni Reading' app, allowing users to upload photos of their meter readings to potentially reduce inflated billing. He said the app will soon be extended to K-Electric (KE) users. The committee also expressed displeasure over the absence of the Federal Minister for Power, who was expected to answer questions on Independent Power Producers (IPPs) and sectoral inefficiencies. Senator Mohsin Aziz said the establishment of certain IPPs was an injustice and questioned why excess profits have not been recovered. Senator Shibli Faraz alleged that inflated project costs were used to justify higher returns, adding that no real steps have been taken to curb the circular debt crisis. 'The public is bearing the burden of government inefficiencies,' he said. Senators raised concerns about forced load shedding, especially in areas like Tharparkar, Matiari, and Umerkot, where daily outages last up to 14 hours, despite consumers paying their bills. Senator Poojo Bheel accused local officials of corruption, claiming they take bribes for illegal connections and restore disconnected supplies for a 'fee'. He emphasised that even paying customers are facing denial of their rights due to systemic failure. In response, Dr Irfan explained that revenue-based load shedding occurs in areas with losses exceeding 20%, citing a tragic case where a SEPCO employee was fatally stabbed during a disconnection drive. KE's Chief Distribution Officer Sadia Dada said that out of 2,100 feeders, about 30% face load shedding due to high electricity theft, often through Kundas (illegal hooks) in informal settlements. She said consumer bills are now offered in instalments to ease payment difficulties. Dr Irfan stated that 58% of consumers fall under the 'protected' category, paying Rs 10 per unit. With the approval of international partners, the government will allocate Rs 250 billion in subsidies, while also rolling out more tech-based solutions for theft control. So far, 500,000 people have downloaded the meter reading app, with 250,000 registered users. Senator Haji Hidayatullah raised an over-billing case involving a Rs 2.3 million charge on a property in Peshawar that had already been cleared by PESCO. He claimed PESCO officials offered to settle the bill for Rs 300,000, calling it blatant corruption. The Secretary Power assured that the matter will be investigated. The CEO of HAZECO also briefed the committee on issues in Sub-Division Lora Chowk, including estimated billing, feeder faults, and pending ELR work under release numbers 46241, 51911, and 51910. Following extensive deliberations, the committee expressed displeasure at the Power Division's repeated deflection of questions and directed the department to submit comprehensive answers at the next meeting. Copyright Business Recorder, 2025
