The Government has completed negotiations with 14 furnace oil-based independent power producers (IPPs) under a “take-and-pay” agreement, with discussions continuing with other IPPs.
According to a news report, Prime Minister Shehbaz Sharif announced the gradual closure of old power plants to reduce electricity costs and promote energy efficiency. This step comes within the framework of broader energy sector reforms aimed at relieving financial pressures on consumers and the economy.
The National Transmission and Distribution Corporation (NTDC) has issued a revised entitlement order, prompting the DOE task force to begin negotiations with independent power producers (IPPs) that operate on high-cost fuels such as high-speed diesel (HSD) and residual fuels. Furnace oil (RFO), and reconverted liquefied natural gas (RLNG).
HSD-powered Halmore Power was identified as the most expensive IPP, generating electricity at Rs 61.23 per kilowatt hour. In contrast, the Och Power Plant, which runs on natural gas, achieved the lowest cost of Rs 3.11 per kilowatt hour.
Other high-cost IPPs include Saif Power and Sapphire Electric, which produce power at Rs 60.8 per kWh, and Orient Power, which produces power at Rs 60.2 per kWh. Engro PowerGen produces at Rs 55.2 per kWh, while Punjab thermal power, using HSD, produces at Rs 50 per kWh. RLNG and RFO based plants like Jamshoro and Muzaffargarh units also reported costs ranging from Rs 46.5 to Rs 39.3 per kWh.
The generation costs of RFO plants like Nishat Chunian and Liberty Power Tech are Rs 33.4 and Rs 34.3 per kWh, respectively, while RLNG plants like Rousch produce Rs 28.8 per kWh.
The detailed cost breakdown emphasizes the variation in energy production costs across different fuel types and plants.
To achieve cost reductions, the government has prioritized plants powered by low-cost fuel while accelerating negotiations with independent power producers. The Department of Energy has been tasked with ensuring the process is completed efficiently to align with the government’s broader energy reform objectives.