ISLAMABAD, SEPT 5: As the country reels under back-breaking electricity bills, blamed on the ‘unfavourable’ agreements with independent power producers (IPPs), Federal Minister for Energy (Power Division) Awais Leghari said on Wednesday that ‘permanent relief’ for consumers was on the anvil.
Speaking on Geo News programme ‘Aaj Shahzeb Khanzada Kay Sath’, Leghari said that a detailed review of matters related to IPPs had also been completed, and the nation would soon hear ‘good news’ in this regard,
The Pakistan Muslim League-Nawaz (PML-N) led federal government faced countrywide protests over prolonged load-shedding and skyrocketing bills throughout the summer.
The incumbent rulers have also faced flak over the IPPs issue, with calls to review the official agreements, as the government has admitted that the country has the highest electricity tariffs in the region.
However, any one-sided change in IPP contracts is unlikely, as Leghari stated earlier this week that the government could not terminate agreements unilaterally, warning that such a move would create a ‘Reko Diq-like situation.’
Responding to a question regarding renegotiations with IPPs in 2019, Leghari claimed that the Imran Khan-led cabinet had provided relief to them under an arbitration process, adding that the PTI government deliberately missed an opportunity by ‘not convincing them.’
Providing details on the ongoing investigation involving the IPPs issue, the power czar said the incumbent government had taken the probe report —chalked out by former minister Muhammad Ali— to the next stage.
In 2019, the PTI-led government appointed Muhammad Ali to chair a committee to audit Pakistan’s power sector, which led to the renegotiation of power purchase agreements (PPAs) between the government and the IPPs.
The power minister also pointed out that several measures were being considered to ‘bring down’ the electricity tariff, adding that negotiations were underway with all the power plants established in the country.
Sector analysts say PPAs with IPPs, made under various regimes without careful consideration of the potential consequences, are the primary cause of Pakistan’s power crisis.
Due to these IPP contracts, energy users already receive some of the worst invoices in the world, with taxes and capacity fees accounting for 70% of their bills, according to power sector analysts.
In the past 15 years, the country has suffered losses of nearly Rs5,082 billion due to the government’s failure to control the menace of circular debt, leading to an annual loss of Rs370 billion.
Since July 2018, the power purchase price has climbed by 95.82%, while the duration of these IPPs contracts will extend until around 2050.
