A.    Background (BG)

1.   This refers to Important QCs in trail, in blue, in italic and after double line (a) 155 of 27.2.25 about Government saved Rs 1.1 Trillion & Action for Bills reduction (b) 138 of 16.11.24 about New Financial Model proposed for IPPs Capacity payments cut. (b) 129 of 18.10.24 about Five + 18 Power Companies Agreement Termination & Jamaat, etc efforts for U

2.   We also refer to several other PGE142 including  (a) 127 of 11.10.24 Electricity Power Termination Agreements to Public Favor due to JI, FPCCI, etc. efforts (b) 118 of 30.8.24 about KE FCA Bomb of Rs 37.75 for May-June 2024 per NEPRA order in upcoming bill and Jamaat –e-Islami

B.   Updated Commentary

Further to BG & KQU 3265 dated 27.2.25, being an important matter, we would inform you about Mr Fawad Yousafzai Article of 25.2.25 Govt working to reduce taxes on electricity bills (Attachment 157.1) in the ensuing paragraph, with emphasis in bold & Underline for quick reading.

2.   A parliamentary panel was informed recently that the government is working to reduce taxes on electricity bills and will raise the matter in this regard with the IMF next month.

3.   The Senate Standing Committee on Power that met with Senator, Mr Mohsin Aziz in chair was told by Special Assistant to Prime Minister on Power Muhammad Ali that the government has not pressurized or coerced any IPP for revising contracts, however, warned that any IPP that refuses to negotiate would face a forensic audit

4.   The Committee that met with Senator Mr Mohsin Aziz in the chair reviewed ongoing negotiations with IPPs, forensic audits, and the government’s privatization strategy for power distribution companies.

5. Mr Muhammad Ali said that the government had terminated contracts with six IPPs, while others have been agreed for rupee-based returns and hybrid take and pay basis.

6.   He said that earlier, the government was paying between Rs 70 billion and Rs 80 billion annually for these power plants, with Hubco alone receiving Rs 30 billion per year.

7.   Senator Mr Shibli Faraz asked that there have been rumors of arm twisting with the power producers while renegotiating the contracts with IPPs? SAPM Mr Muhammad Ali while refuting the allegation stated that fault lines of power producers were highlighted during the negotiations.

8.  Govt is currently working on RLNG-based, gas-based, and other power generation companies owned by the federal and provincial governments. Discussions are also underway with 45 renewable energy plants, including wind and solar, ensuring no impact on their lenders, Ali said. Senator Shibli Faraz asked why no forensic audit had been conducted on IPPs despite billions being paid to them. IPPs have extracted massive sums through fuel inefficiencies and deceptive efficiency claims, he added.

9.   While acknowledging the concern of Mr Shibli Faraz, SAPM said that Pakistan lacks the expertise to conduct forensic audits for 50 to 60 power plants. “Conducting a forensic audit requires significant financial resources, and in 2020, SAPM have asked Rs 22 million for conducting the audit and that too were not allocated,” Ali added.

10.   However, he revealed that a forensic audit is currently underway for one plant that refused to negotiate with the government. Moving forward, any IPP that does not engage in negotiations will be subjected to a forensic audit, the SAPM warned.

11.   Federal Minister for Power Awais Leghari said that ongoing negotiations with IPPs are expected to save Rs1.4 trillion.

12.   Secretary Power Division informed the committee that the government plans to privatize three power distribution companies: IESCO, GEPCO, and FESCO, while HESCO, SEPCO, and PESCO would be offered under long-term concession agreements. Secretary Power Dr Fakhre Alam Irfan further informed that the government is working to reduce taxes on electricity bills but require prior approval from the IMF. “Our discussions with the IMF are scheduled for the first or second week of March,” Dr Fakhre Alam Irfan added.

13.   Senator Mohsin Aziz remarked that relief has not trickled down to consumers despite all the positive outputs of IPPs negotiations. Federal Minister for Power said that since June 2024 the government has reduced electricity cost around Rs 4 per unit for domestic consumers and Rs 11.5 to 12 for industrial sectors. It is hoped that the cost of electricity will further lower down in future as negotiations with other IPPs will conclude. The minister assured that more significant reductions in power tariffs are expected in the future.

14.   Responding to Mohsin Aziz concern, Muhammad Ali said that as negotiations with IPPs conclude, the benefits will gradually be transferred to consumers. He also disclosed that talks have begun with 45 state-owned power plants. He said that the government has fixed the return of 17 per cent for Power Plants against the unprecedented return of 35 pc in the last decades. SAPM said that the government has recovered Rs35 billion from the Power Plants which have been paid by the federal government in lieu of fuel. Additionally, the government has initiated negotiations on 45 renewable plants to reduce the profit margin on the said plants at sustainable rates. He further highlighted that the government intends to make an entity named ISMO for comparative markets in order to make the power sector sustainable for the future.

15.   SAPM also underscored that the government is negotiating to relinquish the interest on the circular debt and formulate a structure for the payment of stock circular debt in the coming five to seven years.

16.   During the meeting, the committee discussed implementation status of the recommendations contained in the Report of the Special Committee of the Senate on Circular Debt, authored by Senator Syed Shibli Faraz in 2018, when he served as the Convener of the Committee. Officials of Power Division apprised that the major portion of recommendations has been implemented and the government is working on the recommendation of ‘Simplification of Tax’.

C.   Multiplication

If Public support continues with Invitation to your friends & relatives to be a part of this great struggle based on regular increase in Jamaat e Islami membership form being filled, then 5 announced and 18 IPPs will announce Termination Agreement and prices will be reduced. Have your Goodself, family, friends filled the Online Form?  It would be in the Interest of Justice and Public interest at Large that now DISCOS like KE & XWAPDA should reduce prices, if we keep pressure on them and Govt.

Although all the Commentaries are to the extent of the Subscribed IDs only, however, your Goodself is allowed to share this PGEC for the Noble Cause to Impart Knowledge, so as to save Electricity usage by your Entity, Home, Masjids, etc leading to less Units usage bill and all Professionals & Masses may make issue as to are being charged to Good Payers. 

(a) Capacity Charges, etc

(b) Why Line Losses (including for Govt, KE & XWAPDA DISISCOs employees and theft) and Bribery as to increase in Tariff 

(c) A huge counter effect of 4 Federal Sales Tax types.

We expect that you would support and be a Member of the JI, whose workers are taking risks and working in your Favour; and Against Unreasonable Prices due to Capacity, Line Losses, etc; and will atleast multiply. 

Otherwise, be ready for constant increases in Electricity Bills with different methods, inspite of Govt claims of New Agreement and Saving,  nothing will be transferred to the public by bills reduction.

D.   Further Details & Services

Should you require any clarification or explanations in respect of the above or otherwise, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com.