Sponsors of the hydropower plants (HPPs) have reportedly refused to revise existing agreements with the Federal government.
According to media reports, HPPs have held at least four consultative sessions with the IPPs negotiations committee, spearheaded by Babar Yaqoob, former federal secretary, to renegotiate the existing power contracts.
However, HPPs have been reluctant to sign MOUs prepared by the negotiation committee.
HPPs claim that the Federal government has employed a broad-brush approach during negotiations with the IPPs regardless of their varying technologies such as furnace oil, gas, coal, solar, and wind, etc.
Although all power generating technologies are different, the Federal government is seeking a uniform reduction in the equity return, operation, and maintenance expenses, the HPPs have argued.
Thermal, wind and solar power plants have 85% to 90% expenses as plant and machinery costs and 10% to 15% as civil works. Hydropower projects, on the other hand, have 80% as civil works expenses and 20% as plant and machinery costs. That is why HPPs have a gestation period of 6 to 8 years against the 2 to 3 years of thermal, wind, and solar power plants.
Sponsors of the HPPs have demanded that the IPP negotiation committee should reconsider its approach and must take into account each power generation technology separately.
HPPs have many advantages over other power plants such as job creation and support to the local construction industry. However, most HPPs also suffer cost overrun due to due to the higher percentage of civil works.