Power minister orders immediate halt to expensive power purchases

ISLAMABAD: Federal Minister for Power Division Sardar Awais Ahmed Khan Leghari has ordered an immediate stop to electricity purchases by distribution companies from small power producers and captive power plants where the tariff is higher than the prevailing national merit order, according to a statement issued on Wednesday.

The issue came to light during a stock-taking exercise of distribution companies, the statement said. Following this, the minister took serious notice of the off-take of power from small power producers (SPPs) and captive power plants (CPPs) by distribution companies (DISCOs) at rates exceeding the applicable national merit order.

Leghari directed that the practice be discontinued at once and brought into conformity with the National Electric Power Regulatory Authority’s framework, including NEPRA’s Grid Code, Distribution Code and directions, the statement added.

He also ordered an inquiry into the matter.

Directions for dispatch under merit order

In addition to halting the purchases, the minister instructed the relevant authorities to coordinate with the Independent System and Market Operator (ISMO) so that SPPs and CPPs are included in the dispatch process on the basis of economic merit order principles.

According to the statement, the purpose of this step is to ensure the least cost for consumers in the dispatch of electricity.

The statement did not provide further details about the scale of the purchases or identify the distribution companies involved. It said only that the matter surfaced during the review of DISCOs.

The development centres on whether electricity procurement by distribution companies was being carried out in line with the prevailing national merit order, under which power is expected to be dispatched on the basis of cost efficiency.

By directing coordination with ISMO, the minister indicated that SPPs and CPPs should be considered within the formal dispatch mechanism under economic merit order principles rather than outside that framework.

The statement said the minister’s instructions were aimed at ensuring compliance with the applicable regulatory codes and directions, while also protecting consumers from higher-cost electricity procurement.

The inquiry ordered by the minister is expected to examine the circumstances in which the off-take took place and whether the purchases were consistent with the governing rules and procedures cited in the statement.

The statement further said that Leghari had directed coordination with ISMO to include SPPs and CPPs in the dispatch process based on economic merit order principles, ensuring least cost for consumers.