Startling revelations have emerged regarding the detrimental role of some Independent Power Producers (IPPs) in Pakistan’s economic decline, 24NewsHD TV Channel reported on Monday.
According to the report, certain IPPs received billions of rupees from the government without generating a single unit of electricity in the country.
Moreover, these power plants were established at four times the cost compared to similar projects in Bangladesh and Vietnam, significantly straining the nation's economy.
Further reports indicate that IPPs imported fuel but produced limited electricity, raising concerns about inefficiency and mismanagement.
According to power sector experts, IPPs are reluctant to undergo forensic audits despite several requests by the government.
IPPs also received billions of rupees from the government in the name of plant maintenance but spent not even a quarter of this amount on maintenance.
By taking advantage of ill-devised contracts, IPPs continue to collect billions of rupees from the government of Pakistan no matter they produce power or not. Compared to Bangladesh and Vietnam, IPPs installed wind plants of the same capacity with over four times more expensive in Pakistan.
The IPPS are reported to indulge in overinvoicing. Despite coal reserves in Pakistan, IPPs are relying on imported fuels such as high-speed diesel and imported coal for power generation. IPPs did not generate as much electricity as the import fuel to receive billions of rupee subsidies.
Surprisingly, the government is also bearing the insurance of IPPs. The government also bore the expenses of setting up IPPs in the country. The government was providing facilities to IPP owners in terms of tax duty and insurance.
Despite all expenses, the plants will not be owned by the government on the expiry of the contract period. Most of the owners of the IPPs are local, but deliberately the contracts were made in the name of some foreigners.
According to energy sector experts, due to heavy payments to IPPs, the government is facing serious difficulties to invest in other important sectors. However, some IPPs are willing to negotiate with the government and reduce prices voluntarily.
The IPPs have made hundreds of times their cost, so contracts should be reviewed. Most of the IPPs in Pakistan are monopolised by a few influential families.