Karachi School of Sociology - KSS

21/07/2024

AZA SIEGE
PAKISTAN

Industrialist offers to cut tariff of his two IPPs

Eminent businesspersons who gathered under the banner of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Friday rejected expensive contracts with the Independent Power Producers (IPPs) and sought an independent energy tariff recommended by any international auditing firm of good repute.

They termed the expensive energy tariff unacceptable, unviable and a disaster for the country’s industry.

“I am ready to get my two power plants electricity tariff revised,” offered SM Tanveer, former caretaker Punjab minister for industry, while responding to a question at a press conference along with former caretaker federal minister Gohar Ijaz.

He said the government should talk to IPPs in an effort to reduce power tariffs.

“Such an expensive energy tariff doesn’t suit the industry to flourish,” said Tanveer who was flanked by other FPCCI office-bearers as well.

He noted that the IPPs had invested Rs50 billion but earned Rs400 billion.

“Rs73 billion are being charged from consumers as capacity charges,” he maintained.

Speaking on the occasion, Gohar Ijaz said some plants of IPPs had given zero supply in January, February and March, but were paid Rs10 billion every month.

“Electricity is very expensive which has become unaffordable. Capacity charges are just bad contracts. The electricity tariff is the major problem in Pakistan right now. Annually Rs240 billion are being taken out of the pockets of the people in the form of capacity charges while 25pc of industry has been closed,” he said while lashing out at the government.

The businessman said that in 2015, an average of 13,000 megawatts of electricity were being used whereas the capacity charges were Rs200 billion at that time. But now the capacity payments have soared to Rs2 trillion but the consumption in 2024 is still 13,000MW with a total capacity of 43,400MW.

He said Rs2 trillion was being paid to all these IPP plants with a partial or zero generation of electricity. He said that the country cannot run with such IPP agreements.

The business community also expressed displeasure over changing exporters’ tax regimes and giving more powers to the FBR to audit quasi-exporters.

Published in Dawn, July 20th, 2024

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