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Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement on a 37-month Extended Fund Facility Arrangement (EFF) worth $7 billion. The agreement aims to stabilize Pakistan's economy and promote inclusive growth. However, the deal's conditions could complicate domestic politics and strain relations with some allies. Pakistan must fulfill certain prerequisites, including rescheduling debt owed to Chinese Independent Power Producers (IPP), to secure final approval from the IMF. The country also needs guarantees from major bilateral partners like China, Saudi Arabia, and the UAE to meet its payment requirements. Implementing the required structural reforms, such as increasing tax collection efforts and improving the energy sector, may pose challenges for Pakistan. Overall, the new IMF deal presents both opportunities and challenges for the country. [Extracted from the article]

The Power Division in Pakistan has stated that it is prepared to terminate agreements with Independent Power Producers (IPPs) if recommended by the National Assembly Standing Committee on Power. This comes as the Senate Standing Committee on Power discusses the viability of IPPs in the country, given rising electricity prices, capacity payments, circular debt, and increased solarization. The Secretary of Power highlighted the grim state of the power sector, projecting losses beyond those approved by the regulator. The Minister for Power proposed a thorough review of each IPP's profile and pointed out the cost disparity between hydel projects and IPPs. The Secretary also provided details on the power sector's capacity and the role of Discos and K-Electric as tax collection agents. The circular debt currently stands at Rs2.393 trillion, and the government has failed to meet its target of maintaining it at Rs2.310 trillion. The Power Division also announced plans to privatize Discos in collaboration with the Privatisation Commission and the World Bank. [Extracted from the article]

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) plans to file a petition in the Supreme Court and appeal to the Special Investment Facilitation Council (SIFC) to seek amendments to the agreements with Independent Power Producers (IPPs). The FPCCI argues that the existing agreements and tariffs imposed by the IPPs are financially burdensome and harmful to the national economy and businesses. They intend to challenge the legality of the IPP agreements in the Supreme Court, focusing on violations of fundamental rights or principles of natural justice. Additionally, they seek administrative intervention from the SIFC to renegotiate the terms of the agreements and reduce their financial impact. The FPCCI aims to amend the agreements to make them more favorable for the economy and businesses, providing relief from the current financial strain. [Extracted from the article]

The federal government of Pakistan is considering reducing the Return on Equity (RoE) for public sector power projects, including hydro and nuclear plants, in response to pressure from the business community. Prime Minister Shehbaz Sharif has established an Inter-Ministerial Committee to review existing Power Purchase Agreements (PPAs) and protect consumers from losses. The government is also exploring the possibility of renegotiating PPAs with Independent Power Producers (IPPs). However, the Water and Power Development Authority (WAPDA) has opposed the proposal, arguing that it would increase consumer tariffs and potentially delay important projects. [Extracted from the article]

The Federal Minister for Petroleum, Musadik Malik, has announced a Rs 50 billion energy subsidy package for low-income households in Pakistan. This initiative aims to benefit 86 percent of households that consume up to 200 units of electricity, ensuring they retain last year's power tariff. In addition, the government has allocated Rs 600 billion for the Benazir Income Support Programme (BISP) to assist the poor, and Rs 1,200 billion for development projects. Minister Malik highlighted the country's economic progress, including a rise in growth, a record increase in tractor sales, and a significant drop in inflation. He also criticized PTI leader Omar Ayub's remarks on capacity payment agreements with Independent Power Producers (IPPs), pointing out Ayub's involvement in these agreements in 2013. Minister Malik emphasized Prime Minister Shehbaz Sharif's priorities of job creation, a business-friendly environment, and reducing inflation and poverty. He also mentioned a significant reduction in food prices and recent Fitch Ratings as evidence of the country's improving economic stability. [Extracted from the article]

The National Electric Power Regulatory Authority (Nepra) has urged the government to reform power generation contracts in response to public outcry over a significant tariff hike. Nepra has announced an investigation into overbilling by distribution companies due to changes in the meter reading mechanism. The government has provided a subsidy for residential consumers, but this relief has not been officially notified. Nepra has faced criticism for allegedly rubber-stamping government tariff hikes and failing to address inefficiencies in the power sector. The chairman of Nepra has called for drastic reforms to restore public confidence. [Extracted from the article]

A recent study in Pakistan has revealed that hidden costs in power tariffs, such as US inflation and interest on circular debt, are driving up electricity prices for domestic households and businesses. Independent power producers charge bills in US dollars, which shields them from local inflation but leads to additional US inflation charges on Pakistani consumers. Proposed tariff hikes have led to protests, and while the government has reduced industrial tariffs, household tariffs are still set to increase. Experts are calling for the government to renegotiate power purchase agreements with power plant operators to address these issues. The regressive nature of the tariff disproportionately affects smaller consumers, and the discrepancy between installed power generation capacity and transmission capacity has created excess capacity, further inflating costs. The government aims to shift to competitive tariffs at the distribution company level in the future. [Extracted from the article]

Johar Qandhari, President of the Korangi Association of Trade and Industry (KATI), has expressed concerns about the recent increases in electricity and gas charges, stating that they are negatively impacting industries and hindering production and business activities. Qandhari has called on the government to reduce electricity rates to 9 cents per kilowatt-hour and lower interest rates to 12 percent, arguing that these measures would stimulate economic growth, increase exports, attract investment, and create employment opportunities. He has also criticized the contracts with Independent Power Producers (IPPs) and suggested procuring power from more affordable sources to alleviate the burden of capacity charges on the public. Qandhari believes that implementing these changes could lead to significant economic benefits, including increased exports, higher revenue, and a reduction in debt. He emphasizes the importance of consulting with stakeholders and creating a business-friendly environment to enhance Pakistan's competitiveness in the global market. Additionally, Qandhari calls for a reduction in interest rates, highlighting the current inflation rate of 12 percent and expressing confidence in the business community's ability to contribute to tax generation with the right support and opportunities. [Extracted from the article]

Power Minister Awais Ahmad Khan Leghari criticized the Federal Board of Revenue (FBR) during a Senate Standing Committee on Power session, blaming them for the rising electricity prices and governance issues in the power sector. Leghari stated that the FBR has turned the power sector into a tax collection agency, burdening consumers with high taxes even before the recent tariff hike. He also acknowledged the sector's expenses being tied to the US dollar and the transmission system issues that prevent efficient electricity delivery. Leghari ordered a comprehensive audit of independent power producer (IPP) contracts from the past three decades in response to concerns over unaffordable electricity prices. [Extracted from the article]

The decline in Pakistan's textile exports has prompted industry leaders to call for the government to renegotiate agreements with Independent Power Producers (IPPs) in order to lower the cost of electricity. The high power tariffs, driven by capacity charges, are seen as unsustainable and are stifling industrial expansion in the textile sector. Critics argue that the government is making regular capacity payments to closed and partially operational IPPs, resulting in consumers being charged ten times the capacity charges for the same units. The textile industry is urging for lower power tariffs to reduce production costs and remain competitive with other economies. [Extracted from the article]

Prominent business leaders in Pakistan, represented by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), have called for reduced tariffs on Independent Power Producers (IPPs). They argue that the current energy tariffs are unacceptable and detrimental to the country's industry, hindering industrial growth. The business leaders highlight that IPPs have earned significantly more than their investments, and consumers are being charged excessive capacity charges. They also express concerns about changes to exporters' tax regimes and increased auditing powers of the Federal Board of Revenue (FBR) over quasi-exporters. [Extracted from the article]

This document titled "Ensuring a Fair, Transparent, and Efficient Power Sector in Pakistan" outlines several recommendations for improving the power sector in Pakistan. The document emphasizes the importance of transparency and accountability, suggesting measures such as providing public access to data on Independent Power Producers (IPPs) and conducting forensic audits of IPP plants. It also proposes energy market reforms, including the establishment of a power exchange and the privatization of government-owned power plants and distribution companies. Stakeholder inclusion is highlighted, with a call for representatives of large consumer groups to have seats on the NEPRA Authority. The document also suggests immediate tariff adjustment initiatives and the establishment of an Economic Policy and Business Development Think Tank to drive economic reforms. The author urges citizens to join in the effort to protect the nation's sustainability. [Extracted from the article]

The FPCCI Standing Committee on Energy, led by Malik Khuda Bakhsh, held a meeting to address the negative impact of high electricity charges on Pakistan's economy. They criticized the 40 Independent Power Producers (IPPs) for burdening the public and causing economic crisis, with 25% of IPPs being closed but still receiving payments. The committee demanded a review of capacity charges, which are pushing industries to collapse and causing unemployment and economic losses. They passed a resolution condemning the high charges and urged the government to revisit agreements with IPPs to reduce costs and ensure a sustainable energy supply for economic stability. [Extracted from the article]

The All-Pakistan Textile Mills Association (APTMA) has requested detailed information on independent power producers (IPPs) from the government in order to promote transparency in the power sector. APTMA aims to use this information for research and analysis to better understand governance and policy implementation in the power sector. They have sent letters to key government officials requesting copies of extension agreements, settlement agreements, details on arbitration proceedings, and information on termination proceedings with IPPs. APTMA is also seeking audited financial statements of IPPs from their commercial operation dates to the present. Their goal is to enhance the power sector's governance and accountability for the public's interest. [Extracted from the article]

The article titled "Urgent Call for Renegotiation of IPP Agreements" discusses the appeal made by APTMA to the government to renegotiate agreements with Independent Power Producers (IPPs) in order to reduce electricity costs and eliminate capacity charges. The article highlights the negative impact of high tariffs on industrial growth, including industrial closures, job losses, and hindrance to economic growth. It also emphasizes the financial burden of capacity payments to IPPs, which amount to Rs. 2 trillion annually, and the excessive returns for IPPs, which can reach up to 73%. The article raises concerns about inflated costs in Pakistan's projects compared to similar projects in other countries, suggesting ghost capacity and over-invoicing. It also mentions suspicions of misreporting and overbilling by IPPs, particularly under take-or-pay contracts, with attempts to audit these discrepancies often obstructed. The article warns of the threat of social unrest due to rising electricity rates and provides recommendations for government action, including reviewing and renegotiating IPP agreements, ensuring transparency, addressing financial burdens, and examining energy infrastructure for fraud. [Extracted from the article]

The Senate Standing Committee on Power in Pakistan is launching an investigation into the agreements of Independent Power Producers (IPPs), focusing on their rate of return, capacity payments, and contractual terms. This investigation comes as opposition grows from various groups, including the former caretaker minister for commerce and industry associations, who argue that the current structure of IPP agreements is financially burdensome for consumers. The committee aims to scrutinize the details of current IPP agreements, assess the efficiency of IPPs, and evaluate the government's stance on new power projects. The outcome of this investigation could lead to significant reforms in Pakistan's energy sector. [Extracted from the article]

Pakistan faces the challenge of having the highest electricity tariff in the region, leading to issues such as theft and non-payment of bills. The high cost is due to the disparity between the prices of indigenous and imported liquefied natural gas (LNG). The concept of the Weighted Average Cost of Gas (WACOG) has been proposed as a potential solution, but there is a lack of understanding and resistance from influential business entities. Implementing WACOG could reduce fuel costs, minimize price disparities, increase energy efficiency, and reduce inflation. [Extracted from the article]

The federal government is facing a dilemma regarding the widespread installation of solar systems in Pakistan. Bureaucrats are concerned that solarization could have negative effects on the existing power sector, while politicians are skeptical of this view. There is a proposal to implement net metering, or solarization, in Islamabad, but it is facing political resistance. The Power Division has proposed recommendations for net metering tariff rationalization, but the response from top political offices has been lukewarm. The NPCC, as the System Operator, has raised concerns about the exponential growth of solar generation and its potential impact on the system. They argue that operational constraints and financial viability should be considered when determining the maximum generation induction limit. [Extracted from the article]

The article discusses the issue of circular debt in Pakistan's energy sector, which is negatively impacting the national economy and the public. The total installed power generation capacity is 46,000 MW, with thermal power accounting for 63%, hydropower for 22%, renewable energy for 6.5%, and nuclear energy for 8%. A significant portion of the circular debt is due to capacity payments to independent power producers. Electricity pilferage is estimated to be valued at Rs 380 billion in the previous financial year and may increase to Rs 520 billion in the upcoming year. The article highlights the need for a more sustainable and transparent power sector model, including addressing over-capacity, high electricity tariffs, and power pilferage. The government is urged to consider privatizing public sector power distribution companies in the interest of the public. [Extracted from the article]

The article discusses the fallout of net metering in Pakistan and highlights the importance of conducting thorough research and building public consensus before implementing such policies. Net metering allows households to sell excess renewable energy back to the grid, reducing their electricity bills. However, the article argues that net metering has led to issues with grid stability and has primarily benefited the relatively wealthy, while neglecting the needs of low-income households. The article suggests that countries should adopt localized policies to address the challenges of net metering and ensure equity and grid stability. In the case of Pakistan, the article recommends shifting the responsibility of electricity policies to provincial and local levels for better planning and outcomes. [Extracted from the article]

A conference was held in Islamabad, Pakistan to discuss the history, current state, and future prospects of the oil and gas sectors in the country. The conference, organized by The Monthly Energy Update in collaboration with the Ministry of Energy and Oil and Gas Regulatory Authority, brought together key stakeholders to address issues, challenges, and prospects for the growth of the fossil fuels sector. Topics covered included deregulation, privatization, safety protocols, and the illegal sale of petroleum products. Speakers emphasized the need for deregulation and the importance of eliminating obstacles to the development of the oil and gas industries in Pakistan. [Extracted from the article]

A proposal is being considered in Pakistan to retrofit existing furnace oil-based power plants with coal-fired boilers so that they can run on Thar coal. Currently, furnace oil-based generation in Pakistan accounts for 5.6 gigawatts (GW) or 13% of the country's total installed capacity. However, these aging thermal power plants are expensive to operate due to the high cost of imported fuel. Some power plants, such as the Kot Addu Power Plant, may need to extend their operational lives due to transmission constraints and lack of backup capacity. The conversion process from oil to coal involves replacing the entire boiler section and additional equipment for coal handling, ash removal, and flue gas cleaning. [Extracted from the article]

Chinese power generation and transmission companies are pressuring the Pakistani government to pay overdue amounts ahead of Prime Minister Shehbaz Sharif's visit to China. The Central Power Purchasing Agency-Guaranteed (CPPA-G) has already paid Rs 70 billion to Chinese Independent Power Producers (IPPs) and plans to make another payment soon. The outstanding dues for CPEC power projects amount to approximately Rs 550 billion. Various power companies, including Port Qasim Electric Power Company (PQEPC), Engro Thar, and Pak-Matiari Lahore Transmission Company (PMLTC), have reported significant overdue payments. Prime Minister Sharif's visit aims to address these financial issues and ensure the stability of Chinese investment in Pakistan's power sector. [Extracted from the article]

Pakistan's power sector has not improved in decades due to past flawed decisions, including contracts signed under the China Pakistan Economic Corridor (CPEC) that favor Independent Power Producers (IPPs) and the policy of net metering for solarization. These decisions have led to rising tariffs and a burden on consumers. The power sector is also facing issues such as low capacity in the Power Division, misbalance in investment, politically-backed board of companies, lack of reforms, non-cooperation against theft and corruption, and unrealistic targets set by donor agencies. The power sector circular debt is over Rs 2.6 trillion, and the power sector regulator, Nepra, has shown partiality for government entities. The focus of successive governments has been on increasing generation capacity, leading to transmission limitations. Boards of companies are selected based on connections rather than qualifications, resulting in energy-related problems for the public. The Power Division's failure is evident in the ineligible appointment of new boards for Discos. International financial institutions demand tariff increases but have not refused loans due to poor performance. Non-cooperation of provinces in taking action against power thieves is another issue. Experts suggest handing over the Power Division to power sector experts and setting up a Power Advisory Council (PAC) for advice. Privatization or management contracts for power sector companies are also suggested, along with investment in distribution and transmission systems and a shift away from generation based on imported fuels. [Extracted from the article]

Engro Powergen Thar Limited (EPTL) has urgently requested the Central Power Purchasing Agency-Guaranteed (CPPA-G) to settle Rs 32 billion in outstanding payments by the end of the month. This request is to prevent a default on upcoming debt obligations. EPTL is facing a severe liquidity crisis due to significant overdue receivables from CPPA-G, totaling Rs 79 billion, with Rs 58 billion currently past due. The requested payment is crucial for debt servicing, settling outstanding dues with fuel suppliers, and ensuring the uninterrupted operation of its Thar coal-based power plant. Timely payments are essential to sustain energy infrastructure and honor financial commitments in the energy sector. [Extracted from the article]

The Competition Commission of Pakistan (CCP) has approved a merger in the thermal power sector. The merger involves Whistler Enterprises (Private) Limited (WEL) acquiring a 20.97% stake in Orient Power Company (Private) Limited (OPCOL). WEL is a newly established company specializing in power generation, while OPCOL is an independent power producer operating a 225-MW power plant. The merger was authorized by the CCP as it does not result in WEL's dominance in the market. This approval reflects investor confidence in Pakistan's power sector and highlights the importance of competition in driving industry efficiency and innovation. [Extracted from the article]

Capacity payments to independent power producers (IPPs) in Pakistan are set to increase by 33% to Rs2.8 trillion in the next fiscal year, leading to a significant impact on electricity bills for consumers. Concerns have been raised about the adverse effects of high electricity prices on industrial operations, with many industries already closing and further consumption reductions expected. Despite the rising capacity payments, new IPPs continue to be installed, and the devaluation of the rupee exacerbates the financial impact. Energy costs for the next fiscal year are projected to range from Rs8.61 to Rs9.34 per unit, with capacity charges between Rs15.49 and Rs17.42 per unit. Progress has been made in solar net metering, with 870 MW added in the last eight months, and there is a shift towards solar-based electricity in industrial sectors. The increase in distribution margins for Discos could further burden consumers, highlighting the challenges in balancing electricity affordability with sustainable power generation. [Extracted from the article]

The Ministry of Foreign Affairs (MoFA) has requested the Power Division to address Chinese concerns regarding delayed payments for Independent Power Producer (IPP) projects, the Gwadar power plant, and return on investment for stakeholders in China-Pakistan Economic Corridor (CPEC) projects. The overdue amount for CPEC power projects has reached Rs 526 billion, mainly due to delayed subsidies and low collection. The Power Division expects the release of Tariff Differential Subsidies (TDS) of about Rs 100 billion to be paid to power projects. The Finance Division has allowed the Power Division to draw Rs 4 billion from the Pakistan Energy Revolving Account (PERA) for exclusive payments to CPEC-IPPs. The issue of non-payment has been discussed in inter-ministerial meetings and with Chinese CPEC IPP representatives. Pakistan's Mission in Beijing has recommended an inter-ministerial meeting to address these issues and prepare for the 8th Energy Planning Expert Panel (EPEP) meeting. Chinese CPEC IPPs have complained about the lack of cooperation from the Private Power and Infrastructure Board (PPIB) and the Central Power Purchasing Agency-Guaranteed (CPPA-G) in resolving administrative and financial issues. The Ministry of Planning, Development, and Special Initiatives is preparing for a high-level visit to China in the near future and is working on developing a comprehensive agenda for the visit. During a meeting on April 26, 2024, the conveners of [Extracted from the article]

The article discusses the need for reforming electricity distribution companies (Discos) in Pakistan in order to fix the energy value chain and make electricity more affordable. The Discos face various problems, including governance, pricing, and operations. The first step towards successful reform is eliminating the national uniform tariff, which penalizes efficiency and incentivizes inefficient processes. Incentives should be aligned to improve efficiencies and recoveries, and subsidies should be cascaded down to provinces to create incentives for reducing theft and operational inefficiencies. The article also suggests enabling Discos to enter into bilateral agreements with Independent Power Producers (IPP) to relieve the burden of capacity payments and better manage supply and demand. The governance of Discos can be improved through long-term concession contracts with the private sector, while privatisation may be suitable for Discos with high recovery levels. The ultimate goal is to reduce transmission and distribution losses and make electricity more affordable through reform and restructuring. [Extracted from the article]

President Xi Jinping of China has emphasized the need for China and Pakistan to strengthen their friendship and cooperation, particularly in relation to the China-Pakistan Economic Corridor (CPEC). The federal planning minister for planning and development in Pakistan, Ahsan Iqbal, has expressed readiness to start five new corridors with China under the CPEC. However, the realities on the ground suggest that turning this vision into a reality may be challenging, as Pakistan faces significant debt and the power projects of the CPEC have accumulated outstanding dues. China has raised concerns about the debt and the sustainability of Pakistan's overall public debt. [Extracted from the article]

Pakistan is facing political and economic turmoil due to high electricity costs and record inflation, which is challenging national sovereignty. The main reason for the increase in power tariffs is the growing circular debt in the power sector. The national power regulator, Nepra, has failed to meet its goals and has burdened power consumers. Nepra has not acted on reducing transmission and distribution losses and has granted licenses to less efficient power plants, resulting in high capacity payments. The cost of electricity in Pakistan is also high due to the lack of scrutiny of project costs. Nepra has not conducted technical audits of independent power producers, leading to inefficiencies and higher costs. The institution itself is accused of unrestrained spending and not addressing the country's circular debt crisis. Nepra continues to issue new generation licenses despite over-installed capacity and decreasing consumption. The process of choosing the Chairman and members of Nepra has been altered to suit preferred candidates, undermining transparency and fairness. The article suggests that the International Monetary Fund (IMF) should call for revamping Nepra to address the growing circular debt burden. [Extracted from the article]

The Power Division in Pakistan has been authorized to withdraw Rs4 billion from the Pakistan Energy Revolving Account (PERA) to make exclusive payments to Independent Power Producers (IPPs) under the China Pakistan Economic Corridor (CPEC) for January 2024. This decision was made in line with the Economic Coordination Committee's (ECC) approval to establish PERA with an allocation of Rs50 billion. The power sector in Pakistan has seen significant growth, with a total of Rs2.551 trillion recorded in the first six months of the fiscal year 2023-24. However, there have been concerns raised by the Port Qasim Electric Power Company (PQEPC) regarding delayed payments, with receivables reaching Rs88.38 billion. Efforts are being made to settle the outstanding amounts and ensure sustainable power generation. [Extracted from the article]

The Finance Division has given permission to the Power Division to withdraw Rs4 billion from the Pakistan Energy Revolving Account (PERA) in order to make exclusive payments to Independent Power Producers (IPPs) established under the China Pakistan Economic Corridor (CPEC) for January 2024. This decision was made in accordance with the Economic Coordination Committee's (ECC) approval to open PERA with an allocation of Rs50 billion. However, one Chinese IPP, Port Qasim Electric Power Company (PQEPC), has expressed concerns about delayed payments, with receivables reaching Rs88.38 billion by February 26, 2024. The company has requested immediate measures to reduce the outstanding amount to avoid suspension of plant operations and defaults on loan agreements and government guarantees. [Extracted from the article]