The Senate Committee on Cabinet Secretariat, chaired by Rana Mahmood-ul-Hassan, has recommended a forensic audit of Independent Power Producers (IPPs). NEPRA Chairman Waseem Mukhtar gave a detailed briefing at the meeting.
Demand for Forensic Audit
During the session, Chairman NEPRA highlighted the challenges in balancing interests between the government, power companies, and consumers. He emphasized the difficulty in introducing new power generation plants and mentioned plans to open the commercial market by October-November, allowing consumers to choose their preferred power company. He raised concerns about the financial impact on the system if major consumers opt out, suggesting that residential consumers may face higher tariffs or increased subsidies.
Historical Context and Current Issues
Waseem Mukhtar pointed out that mistakes were made in the past, particularly after 2007, when there was a significant power shortage. Power plants were established with Chinese assistance in 2013-14, anticipating a 6% GDP growth rate. However, the country overestimated its power needs, leading to excess capacity and reduced demand. Agreements with IPPs were made in dollars due to the power shortage, leading to financial losses as the dollar rate increased.
Economic Stability and Investor Confidence
Mukhtar stressed the need for government stability and investor confidence to maintain electricity prices. He argued that unstable economic conditions and a lack of investor confidence would continue to increase electricity prices.
Committee Members’ Concerns
Senator Abdul Qadir expressed concerns about IPPs’ overpricing and called for a stringent forensic audit. He suggested that IPPs had earned substantial profits over the past decade and now require close monitoring. Senator Saifullah Niazi proposed a separate meeting to discuss the matter further.
Specific Issues Raised
Committee members criticized the decision to permit a coal plant in Sahiwal, questioning the logistics of transporting coal via train from the port. They highlighted the high tariffs imposed by IPPs and called for solutions to mitigate the financial burden on the public.
World Bank Meeting Insights
Chairman NEPRA mentioned a recent World Bank meeting where concerns about the regulator’s performance were discussed. Despite these objections, the World Bank indicated widespread concerns suggested that the regulator was functioning effectively.
The Senate Standing Committee on Cabinet Secretariat’s recommendation for a forensic audit of IPPs underscores the need for transparency and accountability in the power sector. The discussions highlighted historical mistakes, current challenges, and the importance of economic stability to ensure fair electricity pricing. The committee’s actions reflect a commitment to addressing consumers’ financial burdens. Improving the overall efficiency and fairness of the power sector.
