Islamabad, Feb 14: In a significant policy shift, the federal government has abolished the requirement for Fuel Supply Agreement (FSA) guarantees for new power projects, a move that was previously mandated by the Private Power & Infrastructure Board (PPIB).
This decision was announced by PPIB Managing Director Shah Jahan Mirza during a public hearing organized by the National Electric Power Regulatory Authority (Nepra), where the board’s proposed fee of $250 per megawatt (MW) was also discussed.
The hearing was convened after Nepra raised concerns about the legitimacy of PPIB charging a fee similar to other entities in the power sector, such as CPPA-G, NTDC, and DISCOs. PPIB had been collecting this fee until Nepra intervened two years ago, halting the collection due to concerns about its impact on consumers.
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The proposed fee would affect nearly 20,000 MW of installed generation capacity and an additional 4,000 MW of transmission capacity. If approved, the one-year impact on consumers would amount to 1.1 paisa per unit, with the potential for a backlog recovery over three years, increasing the charge to 3.3 paisa per unit, or approximately $15.3 million (Rs. 4.2 billion) in total.
Mirza clarified that PPIB’s post-commercial role includes handling dispute resolutions, coordinating security, conducting technical evaluations, and issuing no-objection certificates (NOCs) for changes in project shareholding.
Additionally, the board is responsible for ensuring fuel availability and representing the government in disputes with independent power producers (IPPs). Due to the financial challenges faced by DISCOs, PPIB also provides a power purchase guarantee on behalf of the government.
The proposal has sparked criticism from various industry stakeholders. A representative from Atlas Solar raised concerns about charging fees in rupees instead of dollars, while Punjab Power Development Board (PPDB) demanded a more equitable share in the fee collection.
Solar project representatives and Quaid-e-Azam Thermal Power Limited (QATPL) also expressed objections. Nepra officials, including their chairman and technical experts, questioned the overlap in functions between PPIB and CPPA-G, with some industry representatives suggesting that PPIB’s role has become redundant in the context of the evolving competitive electricity market.
As the debate continues, industry stakeholders remain divided on the necessity of the PPIB fee and the future role of the board in the sector.
