Power Division Delays Net Metering Plan and Energy Reforms
The Power Division has decided to delay the much-discussed net metering tariff adjustment plan due to the recent increase in electricity prices and the public backlash.
In May 2024, the Prime Minister instructed the Power Division to finalize the net metering tariff plan by May 10, 2024. However, the original deadline of May 31, 2024, was extended first to July 15, 2024, and then again to September 30, 2024.
According to sources, the Power Division informed the Prime Minister’s Office (PMO) that, due to the sensitivity surrounding the recent tariff hikes, the issue will be addressed at a later date.
The Power Division has confirmed that internal discussions are complete, and a proposal is ready. Once approval is granted, the necessary reforms will be introduced and shared with relevant stakeholders for their input.
Regarding the restructuring of the NTDC, a committee led by the Minister for Economic Affairs, Ahad Khan Cheema, reviewed the plan on August 1, 2024. The committee requested the lead consultant to provide a draft of recommendations by the new deadline of October 15, 2024.
In terms of progress in the Competitive Electricity Market, the Power Division informed the PMO that a Cross-Sectoral Committee is working on determining wheeling charges. The Working Group is also exploring ways to reduce stranded costs and manage surplus capacity.
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Regarding the use of Thar coal at the Lucky coal power plant, the Power Division stated that the Sindh government needs to speed up the financial closure of the SECMC mine expansion to meet the RCOD target of December 2025.
A meeting has already been held between the Private Power and Infrastructure Board (PPIB), the Sindh government, and the Secretary of Energy to accelerate the project.
On converting the three Chinese Independent Power Producers (IPPs) — Sahiwal, Port Qasim, and Hub plants — to Thar coal, the Power Division reported that a ministerial team, led by the Finance Minister, visited China in July 2024 to start discussions with the Chinese government.
A Chinese delegation then visited Pakistan from July 31 to August 5, 2024, to assess the proposals. Talks have also taken place with the Port Qasim Plant delegation, and the deadline for these conversions is set for July 1, 2029.
Regarding the involvement of private companies in Distribution Companies (Discos), the Power Division informed the PMO that on August 2, 2024, the Cabinet Committee on Privatisation (CCoP) approved the full privatization of IESCO, FESCO, and GEPCO in the first phase, with LESCO, MEPCO, and HAZECO to follow in the second phase.
HESCO, SEPO, and PESCO will be transferred under long-term agreements through a concession model. The World Bank has been brought in as the financial advisor, and the deadline for this task is January 1, 2026.
The sources also mentioned that updates on power sector reforms will be shared with Simon J Stolp, the Energy and Extractives Manager for the World Bank’s South Asia Region, during his visit to Pakistan from September 18-20, 2024. The purpose of his visit is to review the ongoing energy projects and discuss future priorities.