Power purchase agreements: Ministry will start negotiations with IPPs today

The Ministry of Energy (Power Division) would start negotiations of power purchase agreements with independent power producers (IPPs) on Thursday (today) under the direction of the prime minister for seeking relaxations based on mutual agreement after an inquiry report, which recommended recovering Rs100 billion immediately from the owner of power plants.

According to the sources, Secretary Power Division Irfan Ali told this to a meeting of the Cabinet Committee on Energy (CCOE), which was held under Federal Minister for Planning, Development and Special Initiatives Asad Umar on Wednesday.

The sources said that the federal government would hold negotiations with the IPPs in a positive mode for seeking relaxations based on mutual agreement, but not with the intent to harass as Power Purchase Agreements were supported by sovereign guarantees.

A committee headed by Federal Energy Minister Omar Ayub Khan, comprising other members of Federal Minister for Law and Justice Barrister Dr Muhammad Farogh Naseem, Special Assistant to Prime Minister on Coordination of Marketing and Development of Natural Resources Shahzad Syed Qasim, Secretary for Law Muhammad Khashishur Rehman, Secretary Finance Naveed Kamran, and Secretary Power Division Irfan Ali, has been notified by the government to start the crucial talks.

According to a handout issued by the Ministry of Planning, Development and Special Initiatives, the secretary Power Division briefed the committee about the implementation status of the decisions taken in the last CCOE meeting.

The committee noted the position and directed that the measures approved by the committee may be implemented as per the timelines. The Power Division also briefed the meeting on various actions taken to improve the governance in the power sector.

The CCOE directed the Power Division to submit a formal summary to the CCOE containing proposals for further reforms in the sector's governance structure. The committee would reconvene on Friday, to take up remaining agenda items pertaining to competitive markets for electricity and impact of COVID-19 pandemic on the energy sector.

Members of the CCOE including Minister for Railways Sheikh Rasheed, Minister for Energy Omar Ayub, Advisor on Finance Hafeez Sheikh, Advisor for Commerce and Investment Abdul Razak Dawodd, SAPM on Petroleum Nadeem Babar, and officials from the Power Division and the NEPRA were also present.