Naira Eshaal
There is an increase in the rise of electricity prices every new day. There are many families who are looting and plundering the people day in and day out. The per unit price of electric units has exceeded Rupees 70. The issue of electricity prices creates a panic in the hearts and minds of the people. There is more than 43,000 Megawatts installed power generation capacity in Pakistan. 28,811-Megawatt electricity is generated from thermal sources while 10635 Megawatt is produced from water sources, 1838MW is produced from wind. 360-Megawatt electricity is produced from nuclear sources.
822 Mega Watt is produced from solar energy. Half of the electricity is produced by IPPs and according to some analysts these IPPs are the actual apple of discord. Even some experts draw an analogy of these plants with the East Indian Company. Just like East India Company had established its foot in like manner these proved to be the blood suckers for Pakistan’s economy. There are 42 IPPs in Pakistan. All these are thermal facilities.
The first company was Hub Power Company. According to the agreement it was said that Pakistan whether buys electricity or not, as per power capacity of the plant the Government of Pakistan will pay to the owner asper dollar rate. In the coming days whatever agreements were carried out with the IPPs, Per Unit and capacity payment burden went on increasing. The circular debt in the energy sector exceeded 5.422 trillion rupees and the capacity payment to IPPs have crossed Rs 2.25 trillion. Many families own these power plants. On one side is the fact that most of them have an involvement in politics and on the other side is the miserable condition of the masses of Pakistan.
Machinery and fuels are getting expensive. 34 crore units are provided free to the government employees annually in Pakistan. Much of the electric theft is there. Many rich people and industrialists are involved in these. KESC which is often regarded as a success story, one must not forget that the actual subsidy to KESC by the government has crossed Rs 193 billion.
Often the people are protesting against this because eventually this all leads to exorbitant electric prices. Industries are getting closed because of expensive electricity. Domestic use and industrial use of electricity has also seen a decline. The government is facing a great crisis in paying to these IPPs. The rapid rise of solar energy by domestic, agricultural consumers and the people involved in industry is a direct response to the expensive electricity.
It also tells upon the broader global shift towards renewable energy resources. Among renewables solar amounted to 3.2 percent of the generation mix. The Thar Coal project has been lingering on for so many years. In such situations it is no wonder that Hub power company has said that in Pakistan the use of electricity is getting lesser and lesser. According to HUBCO in 2023 electricity use witnessed a reduction to the tune of one sixth. Now HUBCO will make one fifth of its total capacity but it will get the payment to its maximum capacity as per agreements.
There were wrong policies in Pakistan coupled with poor governance and mismanagement. No one thinks in the collective interest of Pakistan. Individual interests have been pervasive. The result is that such fallacious agreements are drafted which only benefit their owners and the loss is borne by the people. However, since these agreements are backed by the sovereign guarantees and now if the government terminates them then no international company will come in Pakistan in future and there will be a loss of credibility.
In comparison to Vietnam and Bangladesh in every plant in Pakistan there was over invoicing to the tune of 4times as compared to the wind plants there as regards their capacity. These plants mostly operated on thermal plants despite the fact that Pakistan had vast coal reserves. It led to a strange vicious circle. Today all know that these IPPs did not produce the electricity as per their optimum capacity. The maintenance and insurance has been borne by the government of Pakistan.
These IPPs received huge subsidies and 1.217 trillion rupees tax relief was given to these plants from the mid-1990s till 2024.Keeping in view all these facts it is evident that such a colossal loss these IPPs caused to the economy of Pakistan. The licenses in their agreement reveal that capacity payment is dependable. The government of Pakistan can audit this capacity. The plants which have been operative since 1994, their audit must be done., These power plants can be retired early also paying them their arrears. In some way the demand for electricity can be increased by installing more and more industry. Businesses are getting closed in our country because of high dollar rates and tedious and prolonged procedures.
The government should give people facilities to start their business and install production houses and factories. The question arises that the Five IPPs which are going to be closed, with the combined capacity of 2400 Megawatts, will there be some recovery of the money they received in the name of maintenance, purchase of fuel and tax relief. Or in the name of national interest all will be forgiven and forgotten?
