KARACHI: Syed Mazhar Ali Nasir, former Senior Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has strongly criticised the agreements with Independent Power Projects (IPPs) for pushing Pakistan’s economy to the brink of collapse.

Mazhar Nasir emphasised the urgent need for a review of these agreements, which have led to exorbitant payments to IPPs, resulting in substantial losses for the industrial sector, unemployment and a significant fall in exports.

He highlighted that despite a significant increase in electricity generation from IPPs, the consumption remains low due to an outdated electricity system, yet Pakistan pays a whopping 2000 billion rupees in capacity surcharge.

The former FPCCI SVP expressed concern over the unsustainable revolving loans of the power sector, which have reached 2655 billion rupees, posing a significant financial risk to the economy. He also pointed out that electric charges in Pakistan have skyrocketed to 17 cents per kilowatt, compared to 6 cents in India, 8.6 cents in Bangladesh, and 7.2 cents in Vietnam.

Mazhar Nasir urged the government to renew the terms of IPP contracts, conduct a forensic audit of all IPPs, and made recovery from non-functional IPPs involved in invoicing.

He lamented that expensive electricity has forced industries to shut down, leading to unemployment and losses, while coal-fired power plants remain closed for two years, yet the government continues to pay them 60% of the capacity charge, exacerbating the revolving debt.

Mazher Nasir further added that the revolving credit of Independent Power Producers (IPPs) has become unsustainable and poses a significant financial risk to the economy. In just two months, electricity rates have skyrocketed to Rs 76 per kilowatt-hour, which is unsustainable.

Copyright Business Recorder, 2024