2020 IPP report’s recommendations: Power sector circles for implementation

LAHORE: The power sector circles have demanded transparency and accountability in Pakistan’s power sector by ensuring the implementation of the 2020 Report’s recommendations regarding Independent Power Producers (IPPs).

They said a damning 288-page report from March 2020 had highlighted widespread irregularities in Pakistan’s electricity sector, including excess payments of over Rs 100 billion to IPPs. However, they stressed that despite the report’s recommendations for a forensic audit and recovery of excess payments, no action has been taken, leaving the people of Pakistan to suffer at the hands of “predatory elites.”

The report, prepared by the committee for power sector audit, circular debt resolution, and future roadmap, identified significant problems in the power sector, but its recommendations remain largely unimplemented. The lack of transparency and accountability has raised concerns about regulatory capture, where powerful interests prioritize profits over public needs.

The unaddressed issues have resulted in continued suffering for Pakistan’s citizens, who face inefficient and costly electricity services. The government’s inaction has sparked calls for accountability and transparency in the power sector.

They said Pakistan’s electricity sector has been a laboratory for ill-conceived policies for the last three decades, benefiting only the wealthy and powerful. The 1994 policy, crafted by the World Bank, set the stage for this disaster. Despite widespread recognition of its flaws, the policy’s legacy continues to haunt the sector through the 2015 Policy, they added. According to these circles, this crisis-like situation has resulted in Rs 2.1 trillion in capacity payments this year and Rs 5.422 trillion in circular debt for 2024.

They said the government has paid billions to idle IPPs while imposing the highest electricity tariffs in the region, forcing the industries off-grid or shut down due to an unsustainable subsidy burden.

The government’s efforts to protect lifeline consumers are commendable, but the gap between costs and recoveries is too vast. The subsidy burden and foreign exchange payments suffocate the economy, triggering a vicious cycle of devaluation, inflation, and tariff hikes.

These circles have urged the government to break the cycle of failure and reform the electricity sector to prioritize Pakistan’s citizens, not elites. Also, they stressed that the government should address the flawed policies, reduce circular debt, and ensure affordable electricity for all, as the nation’s economic future depends on it.

Copyright Business Recorder, 2024