The Economic Coordination Committee (ECC) of the Cabinet has approved Rs149 billion for the power sector to be paid to the IPPs and K-Electric in the current fiscal year.
Former Chairman NAVTCC and columnist Javed Hassan shared his views regarding IPPs on Twitter. The obscenity of the IPP contracts, originally signed by PPP and then substantially expanded by PMLN, expresses itself in a variety of ways.
The obscenity of the IPP contracts, signed first by PPP and the dramatically expanded by PMLN, manifests in so many different ways. First there’s the take or pay terms that means we pay even if we don’t consume. Next there’s the uncapped dollar indexation, so that tariffs rise as
— Javed Hassan (@javedhassan) July 21, 2022
Read more: IPPs’ notice to the Government of Pakistan
He began explaining his stance with the point that there is a condition involved according to which we must pay even without consuming.
He added, “next there’s the uncapped dollar indexation, so that tariffs rise as rupee falls.” Even if the economy is experiencing slow growth with higher interest rates, perhaps consumption declines. In case of IPPs, we, being consumers pay higher tariffs since the government keeps on paying even without consuming.
He expressed his annoyance with this condition by saying, “Those who signed these contracts were mad or determined to screw the country. They could have been both.”
Read more: CPEC energy deals proving costly for Pakistan?
Nepra indicates further increase in power tariffs
The country’s power sector regulator on Wednesday indicated more increase in electricity tariff through Quarterly Tariff Adjustment (QTA) after the rupee plunged to over Rs225 to the US dollar against its estimates of Rs200 to the dollar.
This statement came from Nepra Chairman Tauseef H Farooqi during a public hearing on the government of Pakistan’s proposal to raise the basic tariff by Rs7.91 per unit in three phases: Rs3.5 per unit in July 2022, Rs3.5 per unit in August-September, and Rs0.91 per unit beginning in October. With this hike, consumers’ total tariff, including taxes and levies, will reach Rs40 per unit, up from Rs27 currently. Following notification, the amended Schedule of Tariffs (SoT) for distribution companies and K-Electric will become effective.