PPIB prepared a concept paper exploring the possibilities of converting existing thermal power stations to operate on cheaper fuels. The purpose of concept paper is to work out a 'policy regime' that is simple in processes and attractive enough for the GENCOs / IPPs so that they readily opt for conversion without any further pursuance. PPIB presented that concept paper to PPIB Board in its 88^th meeting held on 30th May 2011. The Board approved the concept paper and its recommendations with the advice that financial implications of conversion of different plants be properly worked out. The financial implications are being worked out accordingly.

Pakistan's thermal power generation capability is currently facing a two edged sword of (i) rising oil prices and (ii) reducing gas quantities. That double-edge sword has resulted in built up of huge circular debt running in billions of rupees, which in turn has virtually stopped any new investment in private power sector. On the other hand electricity generating capacity of the public sector power generation companies (GENCOs) has been derated from the originally installed capacity 4829 MW to 3580 MW. Lately, out of that derated capacity, availability remains dismally low hovering between 1200 to 1400 MW.

In addition to low availability that results in higher duration of load-shedding, low efficiency or high heat rate directly translates to wastage of money and fuel resources i.e. imported furnace oil procured with hard earned foreign exchange and precious commodity of gas. Performance of these GENCOs can be substantially improved by outsourcing the management, operations and maintenance of these GENCOs to well qualified private sector operators (the "O&M Contractor").

PPIB has prepared a Concept Paper that assesses that induction of private sector O&M Contractor may result in (i) lesser outages resulting in availability of around 1700 MW, (ii) optimization of installed equipment that may add yet another 600 MW (iii) augmentation i.e. enhancement of optimized installed capacity, (iv) saving of Rs. 188 billion / annum (at current rates) if efficiency is improved to 36% (v) in the long run it would be more easier to switch over these plants on cheaper fuels.

After obtaining approval of Concept Paper from its Chairman, PPIB has prepared and submitted to Ministry of Water & Power a Summary for the ECC to seek approval of the Concept Paper and its recommendations. PPIB has initiated preparation of drafted Pre-qualification Documents (PQD) and preliminary Information Memorandum.

In order to minimize the procedural processes, save time of tariff approval/reviews and facilitate investors in carrying out their own due diligence regarding financial viability/acceptability of the tariff, PPIB worked out upfront tariff. The upfront tariff has been circulated to various stakeholders for views. The upfront tariff will be finalized after stakeholders have provided views.