NEPRA Questions Dollar Rate Discrepancy in Govt’s Deal With IPPs

The National Electric Power Regulatory Authority (NEPRA) has questioned the dollar indexation arrangement in the government’s agreements with the independent power producers (IPPs).

The power sector regulator has asked the government why the dollar rate was not kept at Rs. 200 instead of Rs. 148 while negotiating a new deal with the IPPs.

The government of Pakistan has signed initial agreements with 47 IPPs, and final agreements have been signed with 30 companies. These are likely to result in estimated savings of Rs. 836 billion.

The revised deal will also result in a reduction in the circular debt by an average of Rs. 0.25 per unit of electricity, which will eventually increase to Rs. 0.40 per unit in 2027.

A representative of the Central Power Purchasing Agency-Guarantee (CPPA-G) revealed that initially, the government and the IPPs agreed to freeze the dollar rate at Rs. 168, but it was reduced to Rs. 148 in the final agreement.


Neelum Jhelum Power Plant Resumes Operations

NEPRA Chairman, Tauseef H Farooqi, was of the view that the “actual performance” of CPPA-G would be considered after the dollar crossed Rs. 168.

He asked the CPPA-G whether they had analyzed the benefit in case the dollar reached Rs. 170, Rs. 175 or more than Rs. 200. To this, the CPPA-G CFO replied that their analysis was based on 5 percent annual depreciation.

However, if the dollar stays at the agreed rate of Rs. 148, it will be beneficial to the government in the case of foreign lenders but not in the case of local lenders, the news report said.