Former Caretaker Federal Minister Gohar Ejaz has called for an urgent review of Independent Power Producers (IPPs) contracts, highlighting the significant financial strain these agreements impose on Pakistani consumers. Ejaz revealed that every consumer is compelled to pay an additional Rs 24 per unit due to what he describes as “dishonest contracts.”
Addressing the Federal Minister of Energy
In a pointed statement directed at Federal Minister of Energy Owais Leghari, Gohar Ejaz urged the minister to provide the nation with a satisfactory explanation regarding the IPPs agreements before initiating any new privatization efforts. He emphasized that these agreements have been a heavy burden on the economy, citing specific statistics to underscore the inefficiencies and financial losses incurred.
Underutilization of IPPs Capacity
Ejaz pointed out that out of a total installed capacity of 23,400 MW from IPPs, less than 50% was utilized in the past two years. He highlighted the stark underutilization of IPP power plants based on imported coal, which have a capacity of 5,000 MW but operated at less than 25% capacity during the same period. Despite this low operational level, these plants still claimed full capacity charges amounting to Rs 692 billion.
Similarly, wind power operations ran at less than 50% capacity, yet incurred additional charges of Rs 175 billion per unit. For RLNG (Regasified Liquefied Natural Gas) plants, even though they operated at 50% less capacity, they were paid Rs 180 billion. Ejaz described this situation as a “national tragedy,” highlighting the severe financial implications for Pakistani citizens.
Financial Impact on Consumers
Gohar Ejaz’s revelations point to a significant economic burden on Pakistani consumers, with Rs 2,000 billion collected annually from the country’s 24 crore (240 million) people due to these IPPs agreements. He argued that these costs are unsustainable for both industrial and domestic consumers. The high electricity rates resulting from these contracts hinder industrial operations and burden households with exorbitant utility bills.
Ejaz asserted that Pakistan’s progress is stymied by these agreements, which necessitate a thorough review. He emphasized the need for transparency and accountability in the energy sector, urging the government to protect national interests and renegotiate the terms of these contracts.
The Need for Reform
The former minister stressed that without revisiting and renegotiating the contracts with IPPs, Pakistan’s energy sector would continue to struggle. The high costs of electricity not only impede industrial growth but also place an undue financial burden on ordinary citizens. Ejaz called for a detailed examination of the agreements, suggesting that the current terms are not aligned with the best interests of the nation.
He urged Minister Owais Leghari to take immediate action to address these concerns, advocating for reforms that would lead to more equitable and efficient energy production and distribution. Ejaz’s appeal reflects a broader demand for greater transparency and accountability in government dealings with private power producers.
Gohar Ejaz’s call for a review of IPPs contracts is a critical appeal for economic justice and efficiency in Pakistan’s energy sector. The underutilization of power plants and the excessive charges being passed on to consumers represent significant financial mismanagement. Addressing these issues is crucial for reducing electricity costs, fostering industrial growth, and alleviating the financial burden on Pakistani households.
The demand for transparency and renegotiation of these contracts underscores the need for a more sustainable and equitable energy policy. Ensuring that IPPs operate efficiently and that their charges are fair and justified is essential for the country’s economic stability and growth. As the government moves forward, the concerns raised by Ejaz must be addressed to create a more resilient and prosperous energy sector for Pakistan.
