Industrialists urge end to IPP contracts

Eminent industrialists have urgently appealed to the federal government to immediately terminate contracts with Independent Power Producers (IPPs) to mitigate the dire economic situation, which has led to the daily closure of industries and skyrocketing unemployment due to exorbitant and unaffordable power tariffs. They stressed that the government must make swift decisions to save either the 40 IPPs or the 240 million citizens of the country enduring severe economic hardships caused by these burdensome contracts imposed by successive administrations.

The industrialists criticised the ruling elite, urging them to act promptly and formulate policies that benefit the people instead of making hollow claims and enjoying luxurious lifestyles. Syed Raza Hussain, President of the Karachi-based Federal B Area Trade and Industries Association (FBATI), wrote letters to Federal Minister for Power Sardar Awais Khan Leghari and Minister for Commerce Jam Kamal Khan, highlighting the challenging situation faced by industries due to exorbitantly high electricity tariffs.

The letter pointed out that the high power tariffs, imposed due to these IPPs, have led to the closure of a significant portion of local industry, causing immense suffering for the people of the country. The exorbitant costs of electricity have made it increasingly difficult for businesses to operate, resulting in widespread unemployment and economic instability, especially for small and medium-sized enterprises, which form the backbone of the economy. In his letter, the FBATI president called for decisive actions to terminate or renegotiate the agreements with these producers to regulate power tariffs in a manner that is fair and sustainable for both consumers and businesses.

It is clear that the actions of the IPPs are jeopardising the country’s future. The closure of industries is not only impacting the national economy but also leading to increased poverty and social unrest. This untenable situation requires immediate intervention from the highest levels of government. Prompt and effective measures can alleviate the current crisis while addressing the challenges posed by the IPPs to safeguard the country’s interests and its people, it said.

Muhammad Farooq Shaikhani, President of the Hyderabad Chamber of Small Traders & Small Industry, pleaded for reducing the unit price of electricity to meet public demand and curb electricity theft. He argued that exorbitant rates force economically disadvantaged people to resort to stealing electricity, thereby destabilising the system. He called for the termination of IPP contracts, along with comprehensive restructuring and reforms across Pakistan’s energy sector.

United Business Group (UBG) Patron-in-Chief SM Tanveer also strongly urged the government to terminate IPP contracts in the country’s larger interest. In a significant development, Farazur Rehman, Chairman and Founder of the Pakistan Business Group (PBG), lauded the efforts of business leaders Gohar Aijaz and SM Tanveer in tackling the critical issues surrounding IPPs. He highlighted that these leaders have brought to light the critical challenges faced by the IPPs, emphasising the need for sustainable solutions.

Rehman noted that the ongoing issues with IPPs have resulted in substantial financial burdens and operational inefficiencies, which are key factors contributing to Pakistan’s economic crisis.

“The proactive measures taken by these leaders have been instrumental in mitigating these impacts, securing better terms for power purchase agreements, and advocating for policy reforms to stabilise the sector,” he said, adding that this strategic approach is expected to lead to more reliable and sustainable power supply solutions for Pakistan.