The federal government is set to extend negotiations to 75 additional Independent Power Producers (IPPs), primarily solar and wind projects, by April or May this year, following successful talks with 29 power producers that will save Rs. 3.498 trillion in future payments.
Federal Minister for Power Awais Leghari informed a parliamentary panel that these negotiations are proceeding despite facing resistance from international stakeholders in some cases. The government views these renegotiations as crucial for both generating savings and addressing the power sector’s mounting circular debt.
Leghari also revealed that authorities are developing a plan to secure Rs1.2 trillion from commercial banks to manage the power sector’s financial challenges. This two-pronged approach—renegotiating power purchase agreements while seeking additional financing—represents the government’s strategy to tackle the persistent issues plaguing Pakistan’s energy sector.
“Since July 2024, we have terminated contracts with six IPPs and revised agreements with eight bagasse-based power producers,” Leghari said. However, he acknowledged that negotiations with wind and solar power producers have proven challenging, with foreign diplomats now intervening in the process.
During the session, Senator Mohsin Aziz leveled serious accusations against IPPs, claiming they engaged in over-invoicing practices. He specifically criticized wind projects from 2012-2014 for what he described as inflated tariff structures.
The minister detailed that revised agreements now cover approximately 12,000 MW of power generation capacity, including 14 private plants (3,200 MW) and six state-owned facilities. However, a significant 15,615 MW of state-owned generation capacity remains unaddressed.
The committee meeting also saw heated debate over the government’s proposed solar policy. Senator Shibli Faraz questioned the fairness of buying electricity from solar consumers at Rs. 10 per unit while selling it at Rs. 50. In response, Leghari defended the pricing structure, arguing that capacity charges must be recovered to maintain grid stability.
“The Prime Minister has ordered a comprehensive review of the solar policy before it receives cabinet approval,” Leghari added, indicating potential revisions to the controversial pricing mechanism.
