‘IPPs have destroyed country’s economy’

Dr Murtaza Mughal, President of Pakistan Economy Watch (PEW), said that Independent Power Producers (IPPs) have destroyed the country’s economy.

He said private power plants are a big threat to the country’s economy and people, making national development impossible.

Dr Mughal said in a statement that the government should buy all IPPs from their owners to eliminate this problem. He said that at least $5 billion would be required to purchase IPPs, which should be arranged by taking loans from international institutions.

The interest on the $5 billion loan will be nothing compared to the payments made to the IPPs. The country’s people will be saved from a great punishment if these units are bought. According to the United Nations, elites are given benefits worth seventeen and a half billion annually.

Five billion dollars can be managed even by reducing these benefits for one year. In addition, government purchases of up to fifteen billion dollars annually and a good chunk of this money are embezzled. Capital can also be managed by reducing annual purchases.

Dr Mughal said that the energy sector’s circular debt had reached Rs2,310 billion in May, while payments to IPPs had reached Rs1,800 billion. The government had to pay a late payment surcharge for the delay in payment.

He said that the role of private power producers is very significant among the factors responsible for the huge increase in electricity bills in Pakistan. The IPP bill is the third largest debt owed to the government after defence expenditures and foreign debt repayments.

However, despite the payment of this amount, the circular mountain is increasing instead of decreasing.