CCI approves model of Indicated Generation Capacity Expansion Plan
ISLAMABAD: The Council of Common Interest (CCI) meeting, presided over by Prime Minister Imran Khan, has approved the model of Indicated Generation Capacity Expansion Plan (IGCEP), which will allow efficient usage of electricity in Pakistan and help reduce the circular debt.
In his tweet, Minister for Energy Hammad Azhar said that through this plan, the power generation will be added when its needed using the demand-supply projection, and the contracts would be on least cost basis via open competitive bidding.
A large part of circular debt originates from excess capacity payments that run into hundreds of billions each year. And expensive power purchase contracts of past.
IGCEP model seeks to eliminate both in future by adding capacity only when needed & through competitive auction. https://t.co/PZIRsosQBf
— Hammad Azhar (@Hammad_Azhar) September 6, 2021
The minister claimed the plan has been pending since 2005, and it will help in the avoidance of issues such as excess capacity and expensive, non-transparent power contracts in the future.
He said if such a model had been put in place in the past, Pakistan would have avoided many problems, including the high circular debt that the power sector faces today.
A large part of the circular debt originates from excess capacity payments that run into hundreds of billions each year. The installed capacity in the country is over 40,000MW, whereas the transmission and distribution system has a maximum load capacity of 24,500MW. For the unutilised electricity of around 15,000MW, the government is paying over Rs450 billion as capacity charges to the Independent Power Producers (IPPs), he said, adding that due to these abnormally high payments, the circular debt reached over Rs2.3 trillion, despite increasing the electricity tariff twice in recent times.
The Cabinet Committee on Energy (CCoE) last month had approved the Indicative Generation Capacity Expansion Plan (IGCEP) 2021/30 with the focus on pursuing renewable and nuclear energy projects.
It said the IGCEP envisioned “the commissioning of a portfolio of new generation projects, including many hydropower projects, Thar coal-based projects, K-3 nuclear power plant, and over 4,000MW of solar and wind-based renewable energy projects”.
Sources said the Strategic Plan Division was advocating three new nuclear power plants for future under the government-to-government arrangement with China but these could not be accommodated for completion in this round, except for K-3, currently under implementation.
The Power Division insisted that the original set of IGCEP assumptions approved by the Federal Cabinet on April 27 should form the basis of its approval by the CCI.
IGCEP approved by the CCoE would mean that 88 per cent of the total capacity addition from 2022 to 2030 would come from indigenous fuel and the remaining 12 per cent from those projects, which were committed before the Pakistan Tehreek-e-Insaf came to power.
“Fossil fuel has more than 50 per cent share of generation capacity right now; however, in the 2022/30 period, the share of fossil fuel will be only 25 per cent.”
Under the approved IGCEP, the generation mix of 2022, which is dominated by fossil fuel, will shift to clean energy (hydel, solar, wind, nuclear) by 2030.
Moreover, during the same period, indigenous fuel-based generation against imported fuel-based generation is going to improve from 69 per cent to 87 per cent of the total fuel-based generation.
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