Pakistan Reviews Hydro, Nuclear Power Projects Amid Surplus Concerns

Pakistan is reviewing its power projects, including hydropower and nuclear plants, due to concerns over energy overcapacity and pricing. This review aims to assess the viability and efficiency of these projects to align power generation with current demand and ensure economic sustainability, according to The News International.

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The review comes as Pakistan has reportedly paid around Rs1 trillion in capacity payments to 26 independent power producers (IPPs) using gas, regasified liquefied natural gas (RLNG), and residual furnace oil (RFO) since 2015, as reported by the Business Recorder. These payments have been a financial strain due to unused power.

Task Force Assessment

Minister for Power Awais Leghari informed the Senate Standing Committee on Power that a task force is currently assessing the IPPs. He expects to provide a detailed outcome and realistic timeframe within the next two weeks. Leghari also mentioned that even committed projects like Bhasha and C5 are under review.

The C5 project refers to the 1,200 MW Chashma Nuclear Power Plant Unit 5. The Diamer-Bhasha Dam on the Indus River, which is under construction, will irrigate 1.23 million acres of land and generate 4,500 MW of electricity annually.

Financial Repercussions

Leghari warned against hasty or unilateral moves against IPPs, citing past experiences like the Reko Diq case where Pakistan faced significant fines for contract violations. He emphasised that these IPP agreements are under sovereign guarantees, making unilateral changes difficult.

The Integrated Generation Capacity Expansion Plan (IGCEP) anticipates about 18,000 MW of new capacity over the next decade, with most from hydropower. "But we are also challenging them. We want to go towards least cost," Leghari said.

Committee Concerns

The Senate Standing Committee on Power expressed concerns over what it called faulty and overpriced IPP agreements. The committee requested copies of all agreements signed with IPPs since 1992 and asked for a briefing on per-unit electricity production costs from these IPPs.

Additionally, the committee asked for a comparison of these costs with those in other regional countries. They also requested a regional comparison, heat audit, and Return on Equity (RoIs) of projects burdening power consumers.

According to the Economic Survey of Pakistan 2024, the installed capacity of electric generation for FY 2024 is 42,131 MW. This highlights the need to optimise power generation to match current demand and ensure economic sustainability.

The Minister's statements underscore the importance of careful planning and assessment in managing Pakistan's energy sector. The outcomes of this review will be crucial in shaping the country's future energy policies and financial stability.