Electricity Should Cost Less Than Rs. 8 Per Unit: Former Minister

Former Caretaker Minister for Interior and Commerce Dr. Gohar Ejaz on Thursday said the actual power tariff should be below Rs. 8 per unit but the government is charging Rs. 60 per unit due to flawed contracts with Independent Power Producers (IPPs). “Why Rs 2 trillion capacity payment Paid to power plants last year which is costing All consumers Rs 24 per unit when the actual cost should be below Rs 8 per unit? Payments were made for idle capacity to IPP, they should be paid only for power produced and delivered to National Grid,” the former minister wrote in a tweet on X. He said, “These contracts with IPPs are with conditions of “ Take or Pay “. which has to be canceled. As per the contracts The Capacity Payment charges are to be paid even if Electricity is not produced by these IPPs, which is unsustainable, These Electricity tariffs of Rs 60 or 21 cents do not exist anywhere in the world”. “If Electricity is bought from Cheapest electricity Suppliers without Capacity Payment and Treated as Merchant Suppliers Electricity Prices will come below Rs 30 per unit instead of Rs 60 per unit plus today,” he added. As per NEPRA’s July 2023 order, Fixed Capacity Payments were projected to be a total of Rs. 1.954 trillion in 2023-24 to all generators, the minister said in another tweet. The actual payment for FY24 is now estimated to end at Rs. 2.112 trillion. Ejaz said capacity payments have shot up from before due to FX movement, high interest rate and unnecessary addition of capacity to the system. The generation in FY23 was 47 percent on imported fuels and will stay the same, Ejaz added.