EFP president demands forensic audit of IPPs, says no room for negotiations

(Karachi) President of Employers Federation of Pakistan (EFP) Ismail Sattar has called for forensic auditing of Independent Power Plants (IPPs) saying there is no room of holding negotiations over the matter.

In a statement issued on Monday, he said the root cause of burgeoning circular debt is the sovereign guarantees of rate of return to IPPs in terms of dollars not rupees. He added the weakening of rupee against dollar in 13 years resulted in loss amounting to an astounding Rs4,802 billion.

He said the inquiry report on power sector has stirred fierce debate on the energy crisis of Pakistan and its identified link to the IPPs.

Sattar highlighted, "The aggressive escalation in energy tariffs is a direct result of the excessive capacity payment to IPPs in US dollars. This greatly adds to public debt of the government and leaves it no choice but to pass it on to the consumers through NEPRA in the form of additional tariffs."

He said, "When consumers are face with this wrath and are unable to repay distribution companies like K-Electric, they resort to illegal means to consume electricity through pilferage by hooking and defecting meters."

The EFP president elaborated that the economic loss emanating from these non-payments is roughly equivalent to Rs12 billion, while circular debt expands by Rs128 billion. "Just imagine the devastating socio-economic impact of this vicious cycle," Sattar remarked.

Ismail stated that during winter, when demand is low the IPPs produce less energy but charge exorbitant payments. "Power companies are actually earning a hefty return on equity as high as 87 percent."

He demanded action and impeachment of those responsible without discrimination and called for forensic auditing into the matter to save dying industries.