• Says talks with banks under way to double their debt repayment tenure with IPPs
• Four Discos to be given to private sector to curtail losses

ISLAMABAD: The government on Wednesday said the National Accountability Bureau (NAB), National Electric Power Regulatory Authority (Nepra) or Securities and Exchange Commission of Pakistan (SECP) would be free to proceed against independent power producers (IPPs) for any misdeed or criminality even after they agreed to give about Rs770 billion discount over the remaining 20-year life of their contracts.

At the same time, the government is holding talks with banks to prolong their debt repayment tenure from existing 10 years to 20 years along with cut in interest rates.

“The government has not cut its hands at all. We have protected our every right (in the revised agreement with IPPs). There is no protection to any criminal act,” said Energy Minister Omar Ayub Khan while talking to journalists along with minister for information Senator Shibli Faraz and Special Assistant to the Prime Minister on Power Tabish Gauhar.

In fact the government had succeeded in convincing the IPPs to vacate stay orders from courts against heat rate tests ordered by the power regulator, the energy minister said, adding that they would share efficiency gains with the government on account of heat rates. The accountability and regulatory institutions would be free to take action if they find any irregularity or wrongdoing and a dispute could be settled in courts, he said.

Mr Omar said the earlier reported Rs836bn savings in revised agreements with IPPs were based on Rs168 per dollar exchange rate that dropped to Rs770bn after rupee appreciated to Rs160 per dollar. Of the savings, he said 50pc discount was on account of capacity payments and 50pc on energy cost.

About talks with banks, Mr Gauhar said banks were being asked to extend their debt repayment tenure to 20 years and interest rate from Kibor plus 4.5pc to 3pc or so. He said the National Bank of Pakistan and Habib Bank had been engaged by the government on the subject.

Also, he said the Sindh government was being asked to shift dollar indexation on Thar-based power plants to rupee as all the local IPPs had been delinked form dollar-based equity indexations to rupee-based equity.

Mr Omar said besides the Rs770bn savings secured from IPPs, the government also achieved Rs2.053trillion saving on about 8,000MW of public-sector power plants including nuclear plants, Wapda hydropower and thermal generation companies through reduction in return on equity.

Giving a breakdown of savings, he said a discount of Rs31.6bn had been secured from Hubco, Rs18bn from Kapco, Rs64.82bn from IPPs under 1994 power policy, Rs182bn form 2002 power policy, Rs3bn from solar projects, Rs147bn from baggasse-based power plants, Rs19bn from wind power plants, Rs33bn on account of operation and maintenance cost, Rs53bn in excess profits and Rs158bn in other areas. Of the total Rs403bn agreed for payment, he said, Rs72bn would flow to fuel suppliers including Rs58bn to PSO with the result that Rs112bn would return to the public sector.

Mr Gauhar said Rs96bn saving had been secured over interest-over-interest and binding contracts had been secured from IPPs to utilise about Rs112bn in filling their fuel storages for all times. He said Rs38bn saving had been achieved only on account of discount on late payment surcharge on non-payment of dues for the first 60 days for which interest rate had been reduced from Kibor plus 4.5pc to 2.5pc even though interest after first 60 days would get back to Kibor plus 4.5pc.

Four Discos

He said the cost of transmission and distribution losses was about Rs150bn per annum. As 85pc of the losses were on account of Peshawar, Hyderabad, Quetta and Multan Discos, they would be given to the private sector under management contracts instead of outright privatisation or sale of shares.

Mr Gauhar said the payment plan with IPPs had been shared with the IMF and Rs1.95 per unit increase was being made in power rates to revive the IMF programme. He hoped the remaining Rs1.39 of the Rs3.34 per unit increase determined by the regulator would not be passed on to consumers amid the pandemic.

Published in Dawn, February 11th, 2021