Time to scrap the deal with IPPs — now

The nation is reeling under the shock and awe of supra-inflated electricity bills. They are being fleeced to the core, and there is no remedy in sight. This expensive power tariff has shunted businesses and made civic life miserable. The prime reason listed behind this affliction is that the country is dependent on imported products, including machinery and fuel, for generating thermal energy, coupled with a controversial and contested accord with the Independent Power Producers (IPPs) that have made it untenable owing to depreciation of the rupee against the dollar.

A glance at regional power tariffs reveals that per kilowatt-hour price in India is INR6.29, Bangladesh Tk4.53, Iran 0.002 (US$) and Afghanistan 6 to 9 Afghanis — including all charges. Whereas, Pakistanis are paying a staggering Rs65 for per unit of electricity at an average, and keep their fingers crossed too. That is so because the IPPs are a pain in the neck, and are flourishing at the expense of the public exchequer. The contract with them is at the root-cause of all disputes in the energy supply chain, along with power theft.

The whistleblower, Dr Gohar Ejaz, has done a great service to the nation by calling a spade a spade. The former caretaker minister pointed out that NEPRA is doling out Rs150 billion per month to the IPPs that have been operating below 10% capacity for the last three months. Thus, a total of Rs370 billion have been paid to owners of three power plants in the last three months, irrespective of the fact that they barely contribute any electricity to the national grid. Some are shut and some are partially operational.

This contractual-crime has pushed the power sector’s circular debt to the brink, as the government is under a legal obligation to make “capacity payments” to the power producers and that too as returns are indexed to the US dollar.

In brief, money is being siphoned off to around 40 Pakistani families (corrupt politicians, bureaucrats and their abettors) at the altar of commoners. These accords are not only in need of being scrutinised and revoked, but also lead to retribution of not only IPPs owners but also their wheeler-dealers. The IPPs make use of over-invoiced receipts, resulting in huge capacity payments.

It is pathetic that consumers are forced to pay Rs24 per unit as capacity payment, which will continue to rise. It is recent history that a unit of electricity that was for Rs17 in April 2022 has risen threefold in two years. A staggering Rs2.8 trillion will go down the drain during FY2024-25 as capacity payments by an incapacitated nation. These payments account for 70% of the electricity tariff for consumers, with the remaining 30% attributed to energy costs.

The million-dollar question is: why tolerate this pick-pocketing, and who are the beneficiaries that are thriving at public expense? The names are no secret, and the people are aware of them. It is also a fact that the owners of 75% of IPPs are locals, who are part of the parasite-driven sycophancy culture and go scot-free. But here the theft and swindling of public money is directly related to an ingredient of national security, as power and energy are related to production and economy.

It needs to be probed under what complicity such a modus operandi was construed; and at whose premise; and who are minting trillions for this turpitude by throwing the nation in the nest of IMF, risking the country’s very existence. These tough, but undeniable, riddles are a sine qua non and must lead to revoking of these draconian one-sided economic ventures. These ‘power’ deals are eating into the vitals of our economy, and are tantamount to treason against the state.

Though we are not accustomed to taking to streets for our rights, this tariff guillotine is obliterating us inside out. Why pay Rs65-plus (average) for a unit when cheaper power generation avenues are amply available. The parliament should scrap this deal. Buttering a few dabblers is crime personified. The minimum that should be done is to rework the deals with a sovereign writ and only pay for the generated and consumed power. Time for a surgical strike on IPPs now.