HCSTSI criticises govt inaction on IPP contracts

Warns that rising electricity bills threaten industrial survival, economic collapse

KARACHI:

The President of the Hyderabad Chamber of Small Traders and Small Industry (HCSTSI), Muhammad Farooq Shaikhani, has expressed deep concern over the government's negligence in renegotiating contracts with Independent Power Producers (IPPs). Despite repeated protests and demands, the government has failed to either cancel or reschedule these contracts, which has severely impacted the business community.

In a statement on Wednesday, Shaikhani highlighted that each month, already high electricity bills are further inflated by various taxes, including charges for electricity, breathing fees, television fees, general sales tax, income tax, surplus tax, additional tax, retailer sales tax, and fuel price adjustments. These added costs are placing an enormous financial strain on the public.

He noted that payments to IPPs have surged by 33%, reaching Rs2.8 trillion in the new financial year, further burdening consumers. The cost of electricity per unit has risen by approximately Rs5 this year alone, translating to an additional Rs310 billion in expenses.

The soaring electricity prices are crippling industrial activity, forcing thousands of factories to shut down. Despite this crisis, the government continues to subsidise IPPs and makes payments in dollars instead of terminating these costly agreements.

Shaikhani criticised the unfair contracts with IPPs, lamenting that even power plants funded in local currency are receiving payments in dollars.

He argued that rising energy costs and tariffs are the most critical issue facing the country, directly hampering industrial growth. Despite a generation capacity of 45,000MW, only 22,000 MW is being transmitted through the national grid, with consumers still being charged for unused electricity. Shaikhani explained that 56% of the electricity price is being spent on capacity charges, with the government paying Rs2 trillion in this regard. He called on the government to decided whether to prioritise the interests of IPP owners or protect the welfare of 250 million Pakistanis. With industries shutting down and operations halting due to exorbitant electricity tariffs, Shaikhani warned that failure to act could result in economic collapse as rising prices and unpaid bills overwhelm the system.