IPPs getting billions of rupees without producing electricity in Pakistan

A debate blaming the exorbitant electricity prices on expensive power purchase agreements with IPPs has been raging for the past couple of weeks.

The worst agreements made with power plants have resulted in Independent Power Producers (IPPs) receiving capacity payments, which are entirely borne by the poor citizens.

In this regard, host Khawar Ghumman presented a detailed report on ARY News’ program “The Reporters.”

According to Khawar Ghuman, there are five most expensive IPPs in Pakistan which are listed below.

Rousch Power Plant: Established in 1999 for a duration of 30 years, it provides electricity at the rate of 745 PKR per unit.

China Power Hub: The plant is producing electricity at Rs350 per unit.

Port Qasim Electric: Provides electricity at 177 PKR per unit.

Saba Power Plant: Also established in 1999 for 30 years, producing electricity at 117 PKR per unit.

Pakgen Power Plant: Produces electricity at the rate of 95 PKR per unit.

What is a Capacity Payment?

Capacity payment refers to the payment made monthly by consumers to the power-producing company to maintain its capacity to generate electricity, ensuring that additional demand can be met.

Notably, these capacity payments to IPPs are made in US dollars, not Pakistani rupees.

Former caretaker commerce minister Gohar Ejaz has been raising awareness through his statements and social media posts about the government’s mistakes and how these mistakes, if not corrected, will deteriorate the country’s economic conditions further.

In one of his posts, Dr. Gohar Ejaz detailed the performance of the five most expensive power plants in the country.

Dr. Gohar Ejaz revealed that without producing any electricity, the Rousch Power Plant was paid Rs1.28 billion from January to March 2024. Similarly, the China Power Hub received Rs33 billion without producing electricity during the same period. Port Qasim Electric was also paid approximately 30 billion PKR without production.

Moreover, from January to March, Punjab Thermal Power was paid around 10 billion PKR, and Jamshoro Power (GENCO I) was paid approximately 930 million PKR without generating any electricity.

Seif Power Project was paid 670 million PKR, and Sapphire Electric Limited received 590 million PKR without producing electricity during these three months.

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