Circular buck.

Byline: Shahzad Sharjeel

PASSING the buck has become a national trait. The government, having run out of rickshaw drivers and street food vendors with billions in benami (proxy) bank accounts, had to turn to the good old Independent Power Producers (IPPs), the favorite whipping boys of political parties. In one fell swoop, outgoing governments and the investments they brought in are tarred with the brush of suspicion.

This piece is not about defending IPPs, and there are no two opinions about better training for our officialdom to safeguard citizens' interests while entering into agreements.

Who would not want a lower electricity bill? Make electricity free if you will, but then please do not insult the citizens' collective intelligence by incessantly talking about making Pakistan 'a magnet for investment'. Honouring contractual commitments backed by sovereign guarantees is the bedrock of investor confidence.

When push comes to shove we turn to the IPPs.

Could the power purchase agreements have been negotiated better? Yes and no. Yes, because hindsight is always 20/20, and no because of the exact same reason, ie that was then, this is now. Let us consider a simple example. Pick up any rent agreement and you would realise that it could have been negotiated variously to benefit either of the parties. The monthly rent and the amount of advance deposit could have been different; and the notice period for vacating the premises could have been shorter or longer. The crux of the matter is that an agreement has been entered into and it must be adhered to for the duration agreed to by the parties and it can only be annulled according to the conditions mentioned therein. Consider for a moment a son petitioning a court of law that his father was negligent in entering into a tenancy agreement and as he has since died; the petitioner will neither pay the rent nor vacate the house.

What one government does to its predecessors comes back to haunt it when it is out of office. The PML-N accused the PPP in the 1990s of determining very high per unit price of electricity in return for allegedly receiving kickbacks from the IPPs. It did not matter to anyone that the IPPs were invited to invest at a predetermined unit price. Another grouse against these agreements was that far too many IPPs were invited to instal far too great a generation capacity leading to a glut. It turned out that against the then 2,000 megawatts shortfall, only 1,000 MW surplus resulted...

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