Electricity Sector Problems Show The Govt’s Incompetence: Ex-Minister

Former caretaker minister for Commerce and Industries Dr. Gohar Ejaz has said that the government is a policy maker and a regulator and not competent to do business. Taking to social media platform X on Monday, Dr Ejaz advocated for privatizing the sector. He stated, “[The] Government is a Policymaker and A Regulator it is not Competent to Do Business, and Power Sector is the True Face of Its incompetence and is forcing misery on All Electric consumers of Pakistan by Enforcing these IPP Agreements for benefit of these 40 companies on 240 million people”. The capacity charges of Rs. 2 trillion-plus which should actually be Rs. 8 per unit are being charged at Rs. 24 per unit due to non-operations and over-invoicing of these Power Plants being managed and half being operated by the government. They should all be privatized and the entire Power Sector should be operated as Merchant Plants and through electricity exchanges selling electricity at the cheapest rates to privatized discos, not at fixed capacity charges and pass through fuels. Electricity will cost less than half at Rs. 30 per unit against Rs. 60 per unit to all consumers Domestic, Commercial, and Industry. We are all victims of incompetence, he added. The former caretaker minister has earlier stated that the actual power tariff should be below Rs. 8 per unit but the government is charging Rs. 60 per unit due to flawed contracts with Independent Power Producers (IPPs). “Why Rs. 2 trillion capacity payment Paid to power plants last year which is costing All consumers Rs 24 per unit when the actual cost should be below Rs 8 per unit? Payments were made for idle capacity to IPP, they should be paid only for power produced and delivered to National Grid,” the former minister wrote in a tweet on X. He said, “These contracts with IPPs are with conditions of “ Take or Pay “. which has to be canceled. As per the contracts, The Capacity Payment charges are to be paid even if Electricity is not produced by these IPPs, which is unsustainable, These Electricity tariffs of Rs 60 or 21 cents do not exist anywhere in the world”. “If Electricity is bought from Cheapest electricity Suppliers without Capacity Payment and Treated as Merchant Suppliers Electricity Prices will come below Rs 30 per unit instead of Rs 60 per unit plus today,” he added. As per NEPRA’s July 2023 order, Fixed Capacity Payments were projected to be a total of Rs. 1.954 trillion in 2023-24 to all generators, the minister said in another tweet.