KARACHI: Korangi Association of Trade and Industry (KATI) has demanded forensic audit of IPPs and electricity tariff at 9 cent per unit for industrial sector for a long term economic growth.
Addressing a press conference here on Saturday, Johar Qandhari President KATI criticizing the exorbitant payments to Independent Power Producers (IPPs) on account of capacity charges, he said that the IPPs are eating more money than Pakistan’s defence budget.
Senator Abdul Haseeb Khan, Senior Vice President Nighat Awan, Standing Committee Chairman Danish Khan, Rehan Javed, Former Presidents Saleem-uz-Zaman, Sheikh Fazal-e-Jalil, Ehtashamuddin, Razi Ahsan and other leading industrialists were also present in the conference.
Qandhari demanded the cancellation of contracts with unnecessary private power companies and a forensic audit of the IPPs. He questioned, “Do we prioritize the interests of 40 IPP-running families, or do we care more for the 240 million citizens?” He lamented that the economic policies so far have favored the former, leading to the neglect of the vast majority.
Johar Qandhari said that it’s a matter of concern that total production capacity of electricity installed is 45,000 megawatts, out of which only 22,000 megawatts are being utilized and consumers are paying capacity charges for the IPPs for remaining unused electricity.
Qandhari mentioned that cost of a unit of electricity for consumers, without tax, is Rs35, which rises to Rs60 after tax. Out of the Rs35, one Rs18 per unit is being paid on account or capacity charges for electricity not even used. “This is pushing the economy towards destruction as Rs2 trillion is being paid in capacity charges, putting severe pressure on the economy”, he added.
Qandhari proposed changes to the capacity conditions of government-owned IPPs, which account for 45 percent of the market, including reducing management costs and shifting from LIBOR of to KIBOR for payments.
Qandhari also suggested renegotiating contracts with privately-owned IPPs, to shift from “Take or Pay” to “Take and Pay” agreements.
He also suggested the government to negotiate with China for debt restructuring and extension of repayment for IPPs under CPEC. He also emphasized the need to upgradation of transmission lines to utilize surplus electricity fully and to use resources for generating cheap electricity.
Qandhari advocated for the establishment of an electricity market in Pakistan, suggesting that the government step back from electricity production and purchase, and entrust these to private companies to foster competition and consumers should have the option to choose their electricity provider, which is offering better terms and cheaper rates.
President KATI urged the government to immediately revisit the agreements with IPPs to reduce the cost of production.
“Lowering the electricity price from 16.5 cents to 9 cents would reduce costs for domestic consumers and industries, lowering production costs, reducing inflation, boosting exports, decreasing circular debt, and reducing import dependence, ultimately driving Pakistan’s economic growth”, he added.
Senator Abdul Haseeb Khan, Standing Committee Chairman Danish Khan, and Rehan Javed supported the Qandhari and urged the Federal Minister for Energy Sardar Owais Laghari to examine IPP contracts under government supervision and IPP contracts be made public and audited by international companies.
Copyright Business Recorder, 2024
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