Capacity payments to IPPs: Caretakers must invoke ‘force majeure’: FCCI chief

FAISALABAD: Caretakers must invoke “force majeure” to stop capacity payments to the IPPs in prevailing circumstances and give immediate relief of Rs500bn to the inflation-hit masses, said Dr Khurram Tariq, President Faisalabad Chamber of Commerce & Industry (FCCI).

Addressing a press conference on the criticality of the enhanced electricity bills, he said that the government was unable to understand the gravity of the issue. He said that the public protests across the country may take a serious turn of civil disobedience which could also pose a serious threat to the national economy.

He said that it is the fundamental responsibility of the FCCI to convey about the ground realities and help the government in resolving the issue well in time.

He said that the electricity crisis was initiated when the government had enhanced the electricity tariff from Rs19.4 to Rs 44 per unit. “Later the base rate was also added fuel to fire”, he said and added that there was no set formula to work out the electricity cost. “Some people are getting bills of 300 units at Rs. 14,000 while the others are charged Rs. 18,000 and 36,000 for the same number of units”, he said and added that a critical analysis has revealed that 70% of total billed amount goes to capacity payment.

He urged upon the government to issue a white paper clearly indicating which government had signed the deals with IPPs and how much amount has been paid to these units under the head of capacity payment since 1994.

He said that universally acceptable transmission and distribution losses are around 10% but in Pakistan our losses are to the tune of Rs. 530bn. He said that due to the inefficiency of the tax collecting agencies, this responsibility has also been transferred to the discos which give an impression of inflated billing. He said that circular energy debt has also exceeded the limit of Rs. 2.6 trillion which would be ultimately recovered from the innocent consumers. He said that despite this pathetic situation 340,000,000 units are being doled out to the government employees and this burden would also be recovered from the already protesting masses.

He said that the situation has been created to push the country towards civil disobedience and asked caretakers to immediately contact and negotiate with the stakeholders to work out an amicable solution. He said that dollar pushed inflation has affected every segment of the economy while exports are being made costlier. He said that a common wage earner could not meet its both ends with Rs. 32,000.

Similarly, an industrialist who was earlier getting electricity bill of Rs. 50 lakh is now billed to Rs. 17,500,000. He said that rumours are rife that electricity would jump to Rs.89 per unit in the month of September. He said that if people would use less electricity even then the bill of electricity consumers would increase due to the capacity payments.

He said that caretakers had assured to fix the issue within 48 hours but no step has been taken so far. On the other hand, the finance minister has expressed her inability to settle the issue due to the conditionality of the IMF.

Dr. Khurram Tariq said that exports have declined from 15-20% and if we lost hard earned markets, the economic crisis would become more complicated. He offered the government to negotiate with the chambers as we are ready to give a presentation and convince the IMF on this issue. He said that the IMF has clamped restrictions on subsidies but it would have no objection to deferment of capacity payments to IPPs.

Responding to a question, he further said that feeders with more than 10% theft may be blocked to build public pressure on the power pilferers. “From this head we could also save Rs. 500bn”, he said and added that FCCI is an apolitical organization and we would not participate in any politically motivated protests.

Senior Vice President Dr. Sajjad Arshad thanked journalists for participating in this press conference and said that FCCI is representing 118 trade bodies and we would prefer to resolve the issue through negotiation and peaceful protest.

Former President Syed Zia Alumdar Hussain said that industrialists had increased the salaries of their workers but it has been gulped by the unprecedented inflation. Vice President Haji Muhammad Aslam Bhalli and executive members are also present.

Copyright Business Recorder, 2023