Solar panel prices drop to record lows in Pakistan

[PakAl]

That’s incorrect. The government is paying for unused electricity and have committed in writing that in case of failure to make a payment, the government can be sued in the International court outside Pakistan.

The terms for each IPPs varies as we have about 42 IPPs in Pakistan alongside many other partners in the energy sector

I've been doing some reading, the Benazir government gave sovereign guarantees to the IPPs in 1994. I couldn't find any information on when the contracts expire or if we are stuck in this for ever? How can a government make agreements like this, even if they were desperate, 10 year agreements would have suited them or create a break clause stating Pakistan has to pay a certain amount of compensation to dissolve the contract. It's like giving navy base to some nation for ever or make agreements on never to explore natural resources in your own nation for economic investments. I started to wonder what agreements we made with the British Empire for our freedom in 1947?

 

[EugeneP]

The government is paying for unused electricity

I found this:

IPP built for Rs50 billion has received Rs400 billion in payments: FPCCI | The Express Tribune

Acting President Mohamin says IPPs get monthly payments of Rs150 billion, including for non-operational plants

tribune.com.pk

But the numbers are staggering. For example:
"The defence budget is Rs2,200 billion, while capacity charges are Rs2,600 billion."

That doesn't make any sense. How can the entire Pakistan military run with smaller budget than payment for unused power?

Also, what does:

52% of IPPs are government-owned and 20% are Chinese-owned.

mean? Government is paying 52% of capacity charges to itself? Also, who are the non-government, non-Chinese IPPs?

 

[Mr X]

I found this:

IPP built for Rs50 billion has received Rs400 billion in payments: FPCCI | The Express Tribune

Acting President Mohamin says IPPs get monthly payments of Rs150 billion, including for non-operational plants

tribune.com.pk

But the numbers are staggering. For example:
"The defence budget is Rs2,200 billion, while capacity charges are Rs2,600 billion."

That doesn't make any sense. How can the entire Pakistan military run with smaller budget than payment for unused power?

Also, what does:

52% of IPPs are government-owned and 20% are Chinese-owned.

mean? Government is paying 52% of capacity charges to itself? Also, who are the non-government, non-Chinese IPPs?

You need to know the history of IPPs to understand this problem and its 3:30am in UK right now.

Some IPP projects are too small and many are very large but in total they are 42 projects. Not all of them are making losses but most of them are…

Some of them are owned by Pakistani companies like Engro, Bank Al-Habib and many of them are owned by Pakistani politicians like Jahangir Tareen, Salman Shehzbaz Sharif etc.

But these are mostly small IPP projects compared to some owned by non-Pakistanis. There have been several contracts of IPPs but most of them were signed in 1993, 2002 and 2016 as far I remember. The ones originally signed in 1993 are expiring between 2024-2030 and the ones signed in 2002 will expire between 2030-2035.

The ones signed in 2016 were part of the CPEC and will take another generation of Pakistanis to finally see them retired but very likely we will have signed more IPPs by then

 

[drkrn86]

It won’t…

It will instead put more pressure on the government. The reason is we are under the contract by IPPs that whether we need the power generation or not, the government is bound to buy the units from the IPPs.

Less demand means more bill for the government to pay for unused electricity unless the government is able to grow the electricity demand and consume these extra units

Wrong.
There is no way that a growing population can't consume that production.

Mind you, the agreements are done in past for a fixed amount of electricity generated while population and it's needs are growing by the year.

Moreover, home based solar power will reduce load on the system reducing load shedding.

Note: Home based solar power generation (at individual levels) isn't as profitable as people assume