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Power Crisis – IPPs do not present a solution – by Nadeem Khan

There is a huge question mark on the power generation as compared to the rated installed capacity which is very much high as against the demand of the country. The reason of short fall is only non payment to older Independent Power Producers (IPPs) as well as the dispute of rate of per unit of electricity IPPs are selling to the Government of Pakistan (GoP) and is still not par with the required rate asked by them. There are further plans to escalate the rate of electricity in short future to accommodate the IPPs demand.

As stated above, the reason for the current power crisis is that there are billions of rupees payable to the working older IPPs by the government of Pakistan. The older IPPs are currently generating only that much power that is duly paid to them. The installed IPPs are not utilizing their full installed capacities as Government has got no money to pay for the dues. IPPs are suggested to be installed when any state enjoys a good fund flow and lesser other resources like water, coal or gas, etc.
Why on earth, the current government is allowing and installing more IPPs ? How the new IPPs will perform on full capacity when the government have no money to pay for the bills of previous IPPs who are under performing due to non payments ? As per contract, the new IPPs are bound to supply power till an agreed upon tenure or a pre-settled credit period and when the credit period will be over, they will start asking for the funds for onward operations and supply. Soon the new IPPs will stand in the line of previous IPPs and will reduce their power generation on the term ‘Pay and get power’ basis.

Why GoP is insisting on allowing additional IPPs ? The answer to above anomaly is becoming evident in time that there are huge commissions or kick backs being paid by the foreign investors to a lot of influential people in the government just to install the new IPP setups. On the notion of having the IPPs right now, the GoP may keep on paying all the IPPs as and when they will have sufficient surplus funds with respect to energy requirement, which GoP will never have and the deficit will keep on inflating its size.

The question remains as it is, when we have no money to pay for the older IPPs, how we will pay to the new IPPs for power generation? Are the investors of new IPPs are associated with a United Nation’s NGO working free for the poor countries ? Or the investors are from a global donor group of rich to bestow us the free services for indefinite times?

We can very well judge, that the recently approved new IPPs will start generation, cost of electricity will increase further. As soon as the agreed upon credit period is over, the new IPPs will start demanding the running payments, payments deferred for the credit period as well as for the new generation. The Pakistan’s fund flow is known to every body and still now we never had budgeted surplus to pay the bills of previous IPPs and we will not have funds to pay for the new IPPs as well and we will keep on experiencing the ‘load management’ or load shedding for decades until and unless we do not initiate other long term mega projects like construction of dams. Such decisions should not be hindered upon by petty cheap drawing room politics as been done for Kalabagh Dam, etc.

Please get rid of this lie that without new IPPs, we had no other option for current power crisis. Yes, we have, as the installed capacity is still too much high than the demand. The only thing is to re-direct the ‘white money’ towards the right direction by start paying off the older IPPs and make up an emergency budget for power payments. Rather, GoP must associate it’s lending (on emergency basis) from external sources just to pay off the existing IPPs to bring down the gap of generation and demand other wise the IPP fiasco will keep on physically haunting us for DECADES and development will seize to exist and Pakistan will suffer the darkness of its history.

About the author

Nadeem Khan

Businessman and part-time/freelance writer

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