PM stops ministry from taking legal action against four IPPs

  • IPPs fail to switch power generation from furnace oil to coal

The prime minister has stopped the Ministry of Water and Power from taking legal action against four independent power producers (IPPs) for failing to switch their power generation from furnace oil to coal.

According to an official source, the ministry had sought approval from the premier for legal action against four IPPs: Hub Power Company (HUBCO) (1200 MW), Nishat Group (two 350 MW power plants) and Saba Power Company (120 MW).

The PM’s Office, however, directed the ministry to seek legal advice from the Law and Justice Division, as legal complications might arise while taking action against the four IPPs.

These IPPs had signed a memorandum of understanding (MoU) with the government at the time of the clearance of circular debt in June 2013 that they would switch their plants to coal, but since they could not fulfil their commitment over the past three years, the government was forced to purchase electricity at a higher price from them.

The source said the PM’s Office was of the opinion that the issuance of legal notices to the IPPs could complicate the matter and might affect the power generation during next summer season. The ministry has been advised to wait until at least 2000 MW is added to the system before forcing the four IPPs out of the system.

The government has plans to add 3600 MW from three LNG-based power plants in Punjab, 2400 MW from two hydro power projects, 969 MW from Neelum-Jhelum and 1400 MW from Tarbela IV before the summer in 2017.

The government is planning to induct idle capacity from captive and rental power plants to decrease electricity load shedding before June next year.

Prime Minister Nawaz Sharif has promised to massively reduce load shedding by June 2017. However, a failure on this count may cost the ruling Pakistan Muslim League-Nawaz heavily in the 2018 general elections.


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