Pakistan's power producers seek closure of profit investigations amid tariff talks

The Independent Power Producers (IPPs) in Pakistan have approached the power sector regulator to halt ongoing investigations into alleged abnormal profits.

The National Electric Power Regulatory Authority (NEPRA) on Monday concluded a key hearing on tariff revision petitions submitted jointly by the Central Power Purchasing Agency (CPPA) and seven independent power producers established under the 2002 power policy.

The CPPA's managing director briefed NEPRA that, as part of the ongoing negotiations, the seven IPPs had agreed to waive over PKR 11 billion ($39 million) in late payment surcharges.

The CPPA further stated that both parties—the CPPA and the IPPs—would withdraw their pending court cases following NEPRA's approval.

The IPPs argued that fuel and operation and maintenance (O&M) cost recoveries had already been settled by the CPPA.

CPPA officials informed NEPRA that future savings under the fuel and O&M categories would be shared with the government to benefit consumers.

A representative of Nishat Power said their petition for tariff revision was conditional upon the withdrawal of all legal cases against them.

"Our request is tied to the closure of all cases filed against us," the representative said, adding that they had challenged all NEPRA notices in the Islamabad High Court.

Similarly, a representative of Liberty Power Tech demanded the withdrawal of suo motu proceedings against their company.

The hearing also addressed key issues, including the exchange rate adjustment mechanism, payment procedures under the “take-and-pay” system, and the insurance cap applied to the agreements.

The CPPA informed the authority that understandings had already been reached on these matters. The seven IPPs involved in the joint petition include Nishat Chunian Power, Nishat Power, Narowal Energy Limited, Liberty Power Tech, Engro Powergen Qadirpur, Sapphire Electric Power, and Saif Power.

According to CPPA officials, negotiations with these seven IPPs are expected to result in a reduction of up to 50 paisa per unit in electricity tariffs.

They also highlighted that broader talks with multiple IPPs have so far secured financial benefits worth PKR 950 billion over the lifetime of the power plants.

"So far, agreements have been reached with 29 IPPs," a CPPA official said, emphasizing that no coercion was involved. "Whichever IPP did not wish to enter into an agreement was free not to. For instance, you all know that Halmore Power did not sign."