According to Power Division sources, the production capacity of four state-run gencos is 4,200 megawatts. The efficiency of these old furnace oil-fueled units is limited to 30 percent. Furnace oil-fueled gencos and the Independent Power Producers (IPPs) generate the most expensive electricity.

The average cost of electricity generated from these plants is Rs54 to Rs60 per unit. Only the 545 MW Nandipur and 747 MW Guddu power plants are efficient, and both of them are proposed to be privatised in the future.

After preparing the proposals, the Power Division will send them to the prime minister for approval. There is pressure on the Power Division to also recommend the closure of 15 IPPs under the 1994 Power Policy.

The sources said 8,000 MW of additional electricity will be required after the closure of the old furnace oil-based power plants.

Operating new power plants at full capacity will significantly reduce capacity payments. Similarly, decommissioning old power plants will significantly reduce K-Electric’s tariff.

The National Electric Power Regulatory Authority (Nepra) has given an extension of up to 10 years to seven power plants that are 25 years old.