Global firms to review IPP deals

With mounting criticism of the independent power producers (IPPs), Prime Minister Shehbaz Sharif has formed a task force for engaging international firms to review agreements with the IPPs and suggest measures to slash capacity payments. At present, electricity consumers are paying over Rs2.2 trillion in capacity charges to even those IPPs which are shut and not producing a single unit of electricity. It is surprising to note that the cost of energy is Rs9 per unit which consumers pay to the plants that produce electricity whereas to the plants that are not generating any electricity, they are paying Rs18 per unit on account of capacity charges. In other words, the closed plants are being rewarded despite producing nothing at all. Out of the total cost of electricity generation, the consumers are paying 70% in capacity charges.