KARACHI: Chairman of the FPCCI Advisory Board and National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, Mian Zahid Hussain, said that the termination of agreements with five Independent Power Producers (IPPs) is projected to yield savings of Rs400 billion.
It is important for other independent power producers to engage collaboratively and contribute to the nation’s advancement, as our survival hinges on it, he said. Mian Zahid Hussain said that the leadership of FPCCI merits commendation for the efficacy of their campaign, which will soon become a big achievement.
He congratulated the FPCCI Group Leader Dr. Gohar Ijaz, President Atif Ikram Shaikh, Patron Chief SM Tanveer, and the entire leadership team on the launch of a very successful awareness campaign.
Govt approves termination of existing Power Purchase Agreement with five IPPs
He advised other IPPs to work with the government because excessive profit is not only hurting people and economy but it will also harm power production business. He noted that IPP owners should understand that electricity is a necessity, and its exorbitant prices are holding hostage Pakistan, its industries, and its people.
According to Mian Zahid Hussain, the government will save 411 billion rupees as a result of the termination of these contracts, bringing the capacity payment down from 2000 billion to 1600 billion rupees. This is the beginning of a move in the right direction, the results of which will start showing soon. The government has initiated negotiations with other IPPs to review the agreements, anticipating positive outcomes.
Mian Zahid said that the IMF has also asked to review these agreements. In the past, extended load shedding in Pakistan compelled previous governments to enter into such contracts with IPPs, causing irreparable damage to the country’s economy. He said that the economy is improving, preventing many losses, and bringing the situation under control. However, it will take some time for the people to experience the expected relief, necessitating further improvement and continuation of the current policies.
Realizing the improved situation, a delegation of Saudi investors is also present in Pakistan under the leadership of the Saudi Investment Minister, and they have signed 27 MoUs.
As a result, there is a possibility of two billion dollar investment from Saudi Arabia, which will restore the confidence of foreign investors, he observed.
According to Mian Zahid the central and provincial governments have reached an agreement that will reduce costs and enhance tax collection in the provinces.
Many local and foreign experts have expressed concerns since the passage of the 18th Amendment, citing an increase in provincial revenue and irresponsible expenditures, while the federal government has been facing financial strain. This amendment was not properly implemented, and the federal government now performs many province-based duties.
Mian Zahid said that the 18th Amendment was also supposed to result in sustainable economic growth, increase tax collections in the provinces, and abolish federal-level ministries, but it never materialized.
Once the provinces have paid their share of interest and tax revenue, the federation is left with few funds for development, defence, compensating for the losses of public corporations, and other government expenditures necessitating further borrowing.
He said that now the government has no option but to control the rising expenditures and accept the IMF’s words.
Copyright Business Recorder, 2024