KARACHI: The Pakistan Business Forum (PBF) has stated that the power purchase agreements (PPAs) with Independent Power Producers (IPPs) were poorly planned and are the main reason for Pakistan’s electricity and financial issues. This has put the country and its industries at risk of economic collapse.
Key Points by PBF President:
- Lack of Expertise: Khawaja Mehboob Ur Rehman, the President of PBF, pointed out that these agreements were made without proper advice or technical knowledge.
- Set Minimum Power Purchase: The agreements require Pakistan to buy a set amount of power from IPPs. For example, the amount owed to Chinese IPPs alone is nearly $2 billion.
- Call for Forensic Audits: The PBF President urged the government to conduct detailed audits of these agreements to uncover any financial or technical irregularities.
Audit Types Suggested:
- Investment Audit: To find any suspicious financial activities.
- Technical Audit: To check the efficiency of IPP-owned power plants.
- Fuel Audit: To verify reported fuel usage and costs.
PBF Recommendations:
- End Mismanagement: Stop repeating mistakes and manage resources better.
- Renegotiate Contracts: Review and change terms of IPP contracts, including tariffs and payment conditions.
- Capacity Payment Fees: Discontinue these fees if audits find major issues.
- Alternative Energy: Promote the use of hydroelectric and other renewable energy sources.
- Payment in Local Currency: Pay IPPs in Pakistani rupees instead of US dollars to save significant money.
Additional Concerns:
- Legal and Financial Risks: Renegotiate contracts to protect the nation’s financial stability, considering current legal and technical flaws.
- International Arbitration: Act quickly to enforce fair contract terms and avoid further deterioration.
By taking these steps, Pakistan can improve the efficiency and transparency of its power sector, negotiate better deals with IPPs, and potentially save a lot of money.
