By Naira Eshaal
There is an increase in the rise of electricity prices every day. There are many families who are looting and plundering the people day in and day out. The per unit price of an electric unit has exceeded Rs 70. The issue of electricity prices creates a panic in the hearts and minds of the people. There is more than 46000 MW electricity capacity in Pakistan. 28,811 MW electricity is generated from thermal sources while 10635 MW is produced from water sources, 1838 MW from wind. 360 MW from nuclear sources and 822 MW 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. Some experts even draw an analogy of these plants with the East India Company. Just like East India Company had established its foothold in like manner, these proved to be the blood suckers for Pakistan’s economy.
The question arises whether, of the five IPPs which are going to be closed, 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 will all be forgiven and forgotten?
There are 42 IPPs in Pakistan. All these are thermal units. The first company was Hub Power Company. According to the agreement it was said that whether Pakistan buys electricity or not, as per power capacity of the plant the Government of Pakistan will pay to the owner as per the dollar rate. In the coming days whatever agreements were made with the IPPs, per-unit and capacity payment burden went on increasing. The circular debt exceeded Rs 2300 billion which is the result of the capacity payment to these power plants.
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. 340 million units are provided free to the government and the government servants. Much of the electric theft is there. Many rich people and industrialists are involved in this. KESC is given a huge subsidy by the government. Often the people are protesting because of 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. According to 2023 reports Pakistan received at 0.87 percent of its electricity from solar power. Now it has been raised to two or three percent.
The Coal project has been lingering on for 50 years. In such a situation it is no wonder that HUBCO has said that in Pakistan the use of electricity is getting less and less. According to HUBCO in 2023 electricity use saw a reduction to the tune of one sixth. Now HUBCO will make use of one fifth of its total capacity but it will get the payment to its maximum capacity as per agreement.
There were wrong policies in Pakistan. 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 sovereign guarantees, if the government finishes them then no international company will come to 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 four times 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. The diesel and imported coal on which these plants operated was also in dollars. It led to a strange vicious circle. Today it is known to everybody that the fuels these IPPs imported did not produce the electricity accoedingly. The maintenance and insurance has been borne by the government of Pakistan. These IPPs received huge subsidies and Rs 12.17 trillion tax relief was given to these plants.
Keeping in view all these facts it is evident that these IPPs caused a colossal loss 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.
The demand for electricity can be increased by installing more and more industry. Businesses are getting closed in our country because of the high dollar rate and tedious and prolonged procedures. The government should give people facilities to start their business and install production houses and factories.
The question arises whether, of the five IPPs which are going to be closed, 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 will all be forgiven and forgotten?
The writer is a freelance columnist
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