Trade, industry urge govt to revisit pacts with IPPs

KARACHI: Businessmen were up in arms against the independent power producers (IPPs), urging the government to revisit the agreement in the larger interest of consumers and industries to bring down the electricity tariffs to help revive industrial and export activities.

At a press conference held at the Federation House on Monday on unbearable electricity tariffs due to capacity charges of IPPs, United Business Group (UBG) Patron-in-Chief S.M. Tanveer said the government is paying Rs2 trillion on capacity charges to those IPPs who are not operating. As a result, consumers are facing the negative impact of this huge amount while the industries are paying Rs24 per unit as against Nepra’s Rs8 per unit.

“How will the industries run at Rs24 per unit of electricity?” he questioned, adding that the government talks about bringing foreign direct investment (FDI) but here this huge tariff is rendering closure of local units, thus making export uncompetitive and causing unemployment in the export and local units.

He questioned the government as to how it would achieve its revised tax collection target of Rs12.9tr from Rs9.4tr when production activities are facing downward trajectory.

“It seems that the government is not realising or understanding how to bring out the industrial sector and people from this crisis situation. Either it saves 40 IPPs or 240m people from devastation,” Tanvir said.

Without revealing any specific data, he claimed closure of 25 per cent of industries in Pakistan. Instead of focusing on political issues, the government should ponder over closure of industries, unemployment and falling exports, he added.

He said “we have made a target of achieving $100bn export by 2030 but this task looks impossible to achieve in view of high power tariff as compared to low power tariff of six cents in the region.”

The industries can survive on a power tariff of nine cents but it is hard to sustain production activities at 16 cents, he claimed.

“It is time for the government to renegotiate with the IPPs and resolve the issue,” he said, adding that people as well as industrialists would continue to go abroad in case they could not get an enabling working environment in which high power tariff is causing huge problems for both the consumers and industrial sector.

Acting President FPCCI, Saquib Fayyaz Magoon said the country generates 45,000 MW out of which 22,000 MW is arriving in the transmission system while on the rest of the electricity, industrialists pay heavy price on the capacity charges in the shape of 55-60pc. “All these difficulties are because of false agreements with the IPPs,’ he said.

UBG President Zubair Tufail urged the government to first negotiate with the owners of IPPs for revisiting the tariff. In case they fail to comply, then the government should put the names of IPPs and their families on the exit control list (ECL) in case they do not renegotiate the tariff. These IPPs have already made huge profits on their investment.

Published in Dawn, July 16th, 2024