Former caretaker Federal Minister Gohar Ejaz has called upon Independent Power Producers (IPPs) to renegotiate their contracts, citing the heavy economic strain on the nation.
Addressing the media, Ejaz, also Patron-in-Chief of the All Pakistan Textile Mills Association (APTMA), emphasized the exorbitant costs imposed by these agreements.
He disclosed that the government has disbursed a staggering 1.95 trillion rupees to the most expensive IPPs. Ejaz pointed out significant disparities in unit costs, with some plants charging as much as Rs750 per unit compared to around 200 rupees per unit for coal power and over 50 rupees per unit for wind and solar power.
Ejaz highlighted specific cases, noting payments of 140 billion rupees to a plant operating at a 15% load factor, 120 billion to another at 17%, and 100 billion to a third at 22%. These three alone account for 370 billion rupees of total expenditures.
He stressed the need for accountability regarding payments to idle power plants and advocated for sourcing electricity solely from the most cost-effective providers. Ejaz underscored that 80% of these plants are Pakistani-owned, with 52% government-owned and 28% privately owned.
Ejaz attributed inflated costs to corrupt contracts, mismanagement, and incompetence, resulting in electricity being sold at 60 rupees per unit. He expressed confidence that sincere government efforts could reduce electricity prices within 60 days, proposing that converting capacity charges into generated electricity could potentially lower taxes on Pakistan’s salaried class by 10%.