ENERGY
Federal Minister for Power, Sardar Awais Ahmed Khan Leghari, Attends Power Sector Reforms Session with International Development Partners
Federal Minister for Power, Sardar Awais Ahmed Khan Leghari, today participated in a detailed session with Power Sector International Development Partners to discuss power sector reforms and the way forward.
The development partners were led by Country Director of the World Bank, Mr. Najy Benhassine, and included representatives from the IMF, ADB, IFC, KfW, the German Embassy, FCOD, UNDP, and AIIB.
During the session, the Federal Minister briefed the participants on the reforms undertaken by the Power Division to improve efficiency and discipline, with a focus on making electricity prices more competitive and affordable for all consumers, particularly for the industrial sector.
While highlighting the importance of tariff rationalization for the country’s economy, the Minister assured participants that all negotiations with Independent Power Producers (IPPs) are being conducted in a fair, transparent, and free manner. He emphasized that the IPPs have the right to walk away from these negotiations, resort to arbitration, or opt for a forensic audit, as per the terms of their agreements.
The Minister noted that the government is taking proactive steps to engage its development partners and has adopted an inclusive approach in policy formulation and implementation.
He further explained that due to the government’s commitment to transparency, approximately 7,000 MW had been cut from the Integrated Generation Capacity Expansion Plan (IGCEP), reducing the total committed capacity from 17,000 MW. This change has resulted in substantial savings in terms of costly power generation.
Awais Leghari also informed the participants about several reforms undertaken by the Power Division, including the transition from “Take or Pay” to “Take and Pay” agreements, the elimination of furnace oil-based power plants, and the conversion of imported coal plants to use local coal. He stated that an extensive study of power generation is currently underway, revealing that the country has not followed a least-cost policy in the past. However, moving forward, the government plans to implement a least-cost policy.
The Minister also updated the participants on efforts to remove transmission constraints, including the construction of the Matiari-Moro-RYK transmission lines, the Ghazi Barotha-FSD lines, and the installation of reactive power compensation devices and battery storage systems.
He provided information on the ongoing restructuring of the National Transmission and Despatch Company (NTDC) into the Energy Infrastructure and Development Company and the National Grid Company. He also discussed the provision of electricity to Special Economic Zones (SEZs) through the development of regulatory and contractual frameworks, as well as Service Level Agreements (SLAs) with industries utilizing captive generation. The government is also working on installing Automatic Metering Infrastructure (AMI) and Asset Protection Management Systems (APMS) on 100% of feeders.
Regarding the elimination of circular debt, the Minister stated that the government is committed to providing a clear roadmap for its elimination within the next five to eight years. He mentioned that the removal of electricity duties and the rationalization of subsidies are key steps in rationalizing electricity tariffs. He also mentioned that the rationalization of net metering is in the pipeline, as it is currently adding a burden of 150 billion rupees to the rest of the consumers.
The Minister informed the participants that inducing incremental demand through marginal pricing and long-term planning are critical, as surplus power is currently underutilized, leading to unnecessary capacity charges.
Additionally, he apprised the participants about the government’s decision to stop buying additional power and the progress on the privatization of Distribution Companies (DISCOs). He emphasized that improving the governance of DISCO boards and implementing reforms at the Power Planning and Management Company are also central to the government’s agenda.
PID/ER
