No Negotiations, Only Forensic Auditing of IPPs: EFP.

KARACHI -- Ismail Suttar, President of the Apex Body of Manufacturers, The Employers Federation of Pakistan (EFP), has said that the root cause of the burgeoning circular debt is the sovereign guarantees of Rate of Return (ROR) to IPPs (Independent Power Plants) in terms of US$ and not Rupees. With a weakening Rupee against US Dollar, the cumulative 13 years' loss amounted to an astounding Rs. 4,802 billion, which calls for full-fledged forensic auditing, and take and pay policy, without any possibility for negotiations

In a Statement, he said that The inquiry report on the power sector has stirred fierce debate on the energy crisis of Pakistan and its identified link to the IPPs. The installed electricity generation capacity in 2020 stands at approximately 35,000 MW, but average energy demand is 19,000 MW because industries are not operating at their optimal potential. This excess capacity stored in power generators of IPPs is what the government is liable to pay to the IPPs in US Dollars and not Rupees. It is analogous to a showroom charging customers on a per day basis, even if the rented car is standing in the garage.

'The aggressive escalation in energy tariffs is a direct result of the excessive capacity payments to IPPs in US Dollars. This greatly adds to the public debt of the government and leaves it no choice but to pass it onto the consumers through NEPRA in the form of additional tariffs...