Independent Power Producers (IPPs) are being paid based on their installed capacity, regardless of the actual electricity they generate. These payments are made in US dollars, not Pakistani rupees. On one hand, Pakistan’s foreign reserves might not be enough to cover even two months’ worth of imports, and due to a shortage of dollars, opening letters of credit is highly restricted. On the other hand, we are extravagantly paying IPPs in dollars. Clearly, our faltering economy cannot afford such luxuries.
Since 2014, IPPs have been draining the country’s resources. Many regions of Pakistan suffer from power outages, while numerous power plants continue to receive full payments despite being completely non-operational. In the region where Pakistan is located, there has been no revolution in the past 5,000 years, so there is seemingly no expectation of a popular uprising. However, the burden of these payments is tightening around the people’s necks day by day.
Thus, it is possible that, in extreme desperation, the oppressed might one day rise and change their fate. It seems that our rulers are completely indifferent to the people’s hardships. Perhaps they believe that no matter how much they oppress the people, they lack the will or desire to rise up. Hence, rulers are increasing the price of electricity per unit to make these payments to IPPs. In the past month alone, the electricity tariff has been raised four times, and now there are reports of another increase of 2.10 rupees per unit in the coming days. The oppression in Pakistan knows no bounds.
NEPRA, the regulatory authority, has failed to perform its duties. It was supposed to protect the rights of electricity consumers, ensuring that no unnecessary burden was placed on them. Yet, news comes that NEPRA has received a request for an increase in per-unit price, and NEPRA will hear the case on a certain date. It is never clear whether a hearing took place, only that NEPRA has approved the request to raise the price. There has never been a report of NEPRA rejecting a request. Though the members of NEPRA are ostensibly Pakistani, they do not make decisions in favor of the Pakistani people.
Pakistan faces various threats, but its faltering economy, the TTP, and an elite mired in incompetence and greed are significant dangers. The payments to IPPs might well be Pakistan’s undoing. The people have been drained to the point where they have no more capacity left. Due to expensive electricity, factories and industries are shutting down. Pakistan has the electricity it needs, but it is not being supplied consistently to the public and industries. Load shedding is common, and electricity prices are so high that profitable business activities are impossible. Without a strong economy, even the most powerful country becomes weak.
In 1994, Benazir Bhutto, on the advice of a bureaucrat from Karachi, first divided WAPDA into several power companies and then introduced 15 IPPs to address the electricity shortage. These IPPs were to build power plants themselves or with foreign investors, and the government was bound to pay for the production capacity, whether or not it bought all the electricity, with payments made in dollars.
In 1994, 15 IPPs were established under these conditions. In 2002, General Musharraf introduced an additional 15 IPPs. The terms were all favorable to private investors, leading them to become involved in the looting of national wealth. In 2004, General Musharraf and Shaukat Aziz distributed licenses to print money to 38 more IPPs. Nawaz Sharif criticized Benazir’s government harshly for these agreements, claiming they were against national interest, but in 2015, Nawaz Sharif’s government installed seven more IPPs using imported coal and LNG. These plants, established in 2015, are among the biggest drains on the public.
Chinese companies have also benefited significantly. During Imran Khan’s tenure, there were attempts to revise the terms, but they were futile. Now, the number of IPPs has reached 101. For growth and development, a consistent supply of cheap electricity is crucial. Pakistan’s current electricity generation capacity is 41,557 MW, including the expensive and consumer-unfriendly private production agreements. The country’s total electricity requirement is 31,000 MW, which, if met, would eliminate load shedding and ensure consistent power supply to homes and industries.
The transmission capacity in the country is about 22,000 MW. The system cannot transfer more electricity than this. Many private plants are not generating electricity according to their capacity, yet they receive full payments, causing load shedding. In other words, while the people of Pakistan are paying fully, the electricity producers are engaged in criminal looting. One reason for high electricity costs is Pakistani banks, which, through collusion, devalue the rupee, make dollars expensive, and significantly increase their and IPPs’ capital.
Our institutions, governments, and political leaders are equally complicit in this looting. The ownership of these IPPs is with major investors, the Government of Pakistan, and provincial governments. 22 public electricity companies hold a 48% stake. Many IPPs, even when closed, receive capacity charges. Our political leaders benefit from these payments. Whenever there is a protest or outcry, they ignore it, either remaining silent or issuing a generic statement to let the storm pass. They are fully confident that the people of Pakistan are too passive.
They know that even if their government falls, the naive public will fall for the same deceit again. Despite the outcry, the looting by IPPs will likely continue, and nothing will change. My only fear is for the country’s security. Until the people of Pakistan rise above the deceit of greedy and criminal so-called leaders, protect their rights vigilantly, understand the correct use of their vote, and elect representatives based on competence, performance, and character, they will continue to be exploited and suffer. May God grant our country enlightened citizens.