Federal Minister of Energy Awais Leghari made a startling disclosure that the consumers are paying Rs 18 per unit as capacity charges which is the major cost of electricity for the users.
In an interview, Leghari explained about the price per unit of electricity. He stated that , the average pool price of electricity stands at Rs 35 per unit, excluding taxes. This price includes fuel costs, which follow international standards and range from Rs. 8 to Rs. 10 per unit. It also covers national transmission cost of Rs.1 to Rs.2 per unit, and distribution companies (DISCOs) expense of Rs. 5 per unit. The highest individual cost component is Rs18.50 per unit, which are the capacity charges. According to Leghari, capacity charges, which are incurred for electricity generation, will decrease as electricity demand or usage increases. Additionally, shifting from imported coal to local coal can reduce fuel costs which may help in reducing the per unit price.
Federal Minister for Energy Awais Leghari has emphasized that the government cannot unilaterally address the issues surrounding independent power producers (IPPs) and their power purchase agreements (PPAs), which have been draining the national treasury. According to the reports, Leghari stated that the government has guaranteed these IPP contracts. However, he mentioned that efforts are underway to privatize loss-making power companies and institutions.
Leghari responded to criticisms from former caretaker minister Dr. Gohar Ejaz, who had criticized the government’s handling of the power sector. Ejaz had pointed out the severe financial strain caused by these IPP contracts, which he argued have led to exorbitant energy bills due to high taxes and capacity fees.
Experts recommend that Pakistan invest in renewable energy sources such as hydroelectric, solar, and wind power, and improve energy efficiency through advanced technologies like smart grids and metering systems. Immediate review and renegotiation of IPP contracts are deemed crucial to prevent a potential economic collapse.
Senate Committee Demands Details On IPPs Agreement
Meanwhile, the Senate Standing Committee on Power has requested detailed information from the Power Division regarding payments made to Independent Power Producers (IPPs) over the past 20 years.
The committee has issued a questionnaire to the secretary of the Power Division, asking for comprehensive details on these payments. Additionally, the committee seeks explanations for these payments and information on the sponsors of all privately established power plants.
The committee also demands an update on the construction costs of wind power plants and the electricity production costs over the past six years. The Ministry of Power has been instructed to provide all relevant information to the committee within three weeks.
