Over 1.2 Trillion Rupees Paid to IPPs Over 10 Years: Revelation

Karachi: An alarming disclosure has emerged regarding the financial transactions with Independent Power Producers (IPPs) in Pakistan. According to recent documents, a staggering amount of over 1.2 trillion rupees was paid to 26 power plants operating on imported fuel over the past decade. These payments continued uninterrupted despite plant closures or operational failures.

The data on the 10-year capacity payments for imported fuel-based power plants has been revealed. The Central Power Purchasing Agency (CPPA) reported that from 2015 to 2024, payments exceeding 1.2 trillion rupees were made. The document further indicates that the details for payments before 2015 will take an additional month to compile.

According to the documents, the power plants established under the 1994 and 2002 power policies include 11 running on imported gas and 15 on furnace oil. Over the past decade, power plants using furnace oil received 758 billion rupees, while those operating on imported gas were paid over 536 billion rupees.

The CPPA’s documents describe these power plants as “white elephants,” given their high fuel consumption and low electricity production efficiency. Many of these plants are reported to be at the bottom of the merit order and have experienced numerous technical faults. Some plants were often non-operational or only used during peak demand, yet they continued to receive capacity payments.

The continuous payments despite operational issues have raised concerns about transparency and accountability in the power sector. The revelation underscores the need for a thorough review of the agreements and operational efficiency of these power plants.

This disclosure is likely to spark significant discussions and scrutiny from policymakers, regulatory bodies, and the public. There may be calls for reforms to ensure that such payments are justified and that efficiency and performance standards are met.

In summary, the revelation about the payments to IPPs highlights significant financial and operational challenges within Pakistan’s power sector. The need for reform and increased transparency has never been more evident as the country continues to grapple with energy issues and financial constraints.