Government Decides to Introduce a New Electricity Buying and Selling System
The government will introduce an electricity market, under which a system for the buying and selling of electricity will be established.
This system will be implemented starting this year, according to the Secretary of the Power Division during a briefing to the Senate Standing Committee.
The government has also terminated a power purchase agreement with another Independent Power Producer (IPP) under a settlement agreement.
Mesrs Rosch Pakistan Power Limited informed the Pakistan Stock Exchange about the termination of the power purchase agreement with the government.
Islamabad (Web News)
The federal government has decided to introduce a new electricity market, under which a system for the buying and selling of electricity will be implemented. During a meeting of the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz, the Secretary of the Power Division stated that the government would introduce this electricity market, which would commence this year.
The Secretary mentioned that currently, the entire electricity is purchased by CPPA, which is then sold to DISCOs, leading to various issues. Therefore, NTDC and CPPA will be merged to establish a new entity called ISMO (Independent System and Market Operator), which will act as a regulator. The Secretary emphasized that these are part of the broader power sector reforms being implemented. The government plans to privatize GENCOs and DISCOs, and NTDC will be divided into three companies, with one subsidiary focused on energy infrastructure.
Senator Shibli Faraz remarked that NTDC has been operating without a permanent head for several years. Now, a decision has been made to divide the company based on its performance, but it was noted that NTDC had never been given the authority for planning and implementation of projects. The Senator questioned how they could trust that the current actions would improve the situation.
Senator Mohsin Aziz questioned the benefits of dividing WAPDA into two parts. The Secretary Power Division responded that he was new to the ministry and was not fully aware of past decisions, but new plans have been made with careful consideration, especially regarding electricity tariffs.
Senator Shibli Faraz further criticized that although new entities are often formed, merit is not considered in staffing or leadership roles. The Secretary assured that the board of NTDC has been consulted on all reorganizational decisions, and a ten-year transmission plan has been developed, dependent on the generation plan for the same period.
Senator Shibli Faraz suggested that the committee should also seek a briefing from the NTDC board, as there is a lack of planning across various ministries. The Secretary confirmed that the head of NTDC, Dr. Fayaz Chaudhry, was recently appointed, and the current plans are based on his leadership.
The Secretary also briefed the committee that the NTDC reforms are set to be completed by March, with recommendations expected by then. Senator Shibli Faraz called for experts to be invited for the next meeting to offer their insights.
The Secretary added that future power sector projects would be developed with a focus on minimizing costs, and no additional costs would be passed on to consumers; instead, they would be borne by the federal and provincial governments.
In response to Senator Shibli Faraz’s concerns regarding high electricity tariffs, the Secretary stated that they are working on addressing these issues and hoped to significantly reduce electricity tariffs by June this year.
Senator Mohsin Aziz noted that the current lower tariffs on excess units benefit only those with export orders, but the overall export situation is not improving.
Government Ends Power Agreement with Another IPP under Settlement Agreement
The government has terminated another power purchase agreement with an Independent Power Producer (IPP) under a settlement agreement. Mesrs Rosch Pakistan Power Limited informed the Pakistan Stock Exchange (PSX) about the termination of the power purchase agreement with the government. This marks the continuation of a series of terminations of agreements between the government and IPPs under settlement agreements.
According to the report, Mesrs Rosch Pakistan Power Limited, which operates under Altern Energy Limited, informed the PSX in a letter that the power purchase agreement with the government has been terminated based on the settlement. The letter mentioned that the company had received all outstanding dues from the Central Power Purchasing Agency (CPPA), and the power complex has been handed over to the government’s National Power Parks Management Company.