INDEPENDENT Power Producers (IPPs), which played a crucial role in mitigating energy-related problems of the country and the masses when the country was facing severe load shedding , feel under pressure these days in the backdrop of an inquiry report that accuses them of having signed “unfair” agreements and misappropriation in tariff and fuel consumption rates. We all are aware of causes of the ills of power sector in Pakistan which includes absence of consistent and optimal energy planning, governmental policies, inefficiencies of Gencos and Discos, massive T&D losses, poor recoveries and above all absence of the political will and consensus necessary to bring and implement long awaited mandatory reforms. This is the time to consider a broader perspective instead of ignoring the key elements and simply blaming the IPPs only which are though one of the stakeholders but not the largest one. In the wake of ensuing vilification and propaganda campaign, their representative body the Independent Power Producers Advisory Council (IPPAC) is trying to set the record straight and save the country’s power sector from any intended or unintended damage. Nod
Like Sugar Commission report, the inquiry report into power sector losses is grossly being misread by some vested interests and all guns again towards the IPPs. IPPs say they were not involved in any wrongdoing and what they earned as profit was strictly in accordance with the terms of the agreements the governments of the time signed with them as per their power policies. There is no doubt that the power sector is facing crippling issues like growing losses and surging circular debt, which successive governments were unable to tackle but there is absolutely no justification to blame solely IPPs for the myopic situation. In fact, IPPs themselves are facing serious liquidity issues because of unpaid dues of approximately Rs. 600 billion besides the challenges thrown by the prevailing subdued economic environment. The inquiry report has pinpointed some issues like overpayments in various forms; high O&M expenses; irregularities in fuel expenses and payments, over reported Capex, iniquitous escalation and indexation and mismatch between Nepra tariff and the payments made by CPPA. However, instead of relying on one-sided propaganda, it would be more appropriate to sort out these problems through meaningful dialogue with IPPs, which have always expressed their readiness to explain their position and side. We must not lose sight of the fact that it was because of the timely investment by IPPs that the country was able to steer through a grave power crisis that badly affected all sectors of the economy and individual consumers. There was a global competition for investment in the energy sector and the then Governments had to offer incentives to attract investment for short, medium and long term interest of the country. Overcoming energy crisis would have remained a dream for a long time to come for a resource starved country like Pakistan if there was no investment by IPPs. Therefore, instead of indulging in public debates on issues that could spoil business and investment climate and also our relations with some of the friendly countries, the sanity demands engaging IPPs in talks and restore their shaken confidence.
