The Supreme Court on Monday directed the Federal Minister for Power Umar Ayub Khan to file contracts, international awards, against Pakistan and details about validity and users of the Independent Power Producers (IPPs). Heading a three-member bench, Chief Justice Mian Saqib Nisar, at the outset of the proceedings, inquired from Federal Minister of Power Division Umar Ayub how much money has been paid to IPPs and what has the government done about it?
The bench was hearing a suo motu case pertaining to 'excessive' amount paid to IPPs by the government. The Chief Justice remarked: "Millions of rupees were paid to IPPs irrespective of the fact whether or not they produced electricity," he remarked.
Upon court's inquiry, the federal minister said that the agreements signed in different tenures are valid. When the Chief Justice asked if the IPPs are serving the best interest of the country as the public money is being doled out. The minister's reply was in the negative.
The court observed that international arbitration forums have given millions of dollars awards against the government of Pakistan and appeals against the awards have also been dismissed and now the government has to pay millions of dollars in awards.
The minister apprised the court that the IPPs were installed in 1994, 2000 and 2007. He explained that there are two types of payments to IPPs; one is capacity while the second is energy, adding that 40 percent is the capacity payment and 7 percent is energy payment.
Umar Ayub said that in Pakistan, the government is the single buyer of electricity from IPPs. He said the government has to provide IPPs furnace oil and purchase electricity from them.
Justice Ijaz noted that as furnace oil is expensive, the government does not provide it to them; and, therefore, IPPs do not produce electricity while the government has to pay capacity payment to them.
The minister informed the court that electricity demand would rise to 55,000 MW by the year 2030. He said the installed capacity of IPPs is 34,000 MW. He also said that electricity demands increases to 25,000MW in summer, but in winter it drops to 13000MW.
The minister said that electricity is generated through wind, solar, hydle, Gencos, thermal and nuclear, but in winter the hydle, wind and solar produce less electricity and therefore dependency on thermal sources increases.
"We are dealing with the international agreements and trying to make electricity available whenever it is required," the minister said. Justice Ijaz observed, "the power plants are like an expensive car on rent whether you use it or not but you have to pay its rent."
He asked the minister to build dams which would not only produce electricity but will also enhance the storage capacity of water.
Umar Ayub said that the objective of the government is to produce cheap electricity. The case was adjourned for two weeks.
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