IPPs fail to deliver despite circular debt payoff
July 14, 2013
LAHORE: The PML-N government may have lived up to its pledge of clearing the debt associated with the independent power producers (IPPs), but it seems the latter have fallen short on delivering their end of the bargain as the country continues to face a power shortage of some 2,000MW.
The shortage has led many experts to say that the government has been hoodwinked by the IPPs and the bureaucracy. The power managers of the new government boasted that power generation would go up to 16,500MW during the summer after the government releases the entire amount to the IPPs. However, the independent power producers have come up short as they only produced 14,500MW on Friday, power sector experts pointed out.
The country is currently producing almost 6,000MW of hydel electricity while thermal and nuclear power stations are producing around 7,900MW and 600MW respectively, the experts added.
“We do not expect the country, at current capacities, to be able to produce 18,500MW, which is the peak demand during summer,” said Ghalib Atta, a power sector player. However, Atta said thermal power producers should be producing at least 10,000 MW instead of 7,900 MW, now that they’re free of the financial crunch. He also went on to add that the average cost of power would remain within reasonable limits during the summer as all gas-run IPPs had been activated and the huge supply of hydel electricity at Rs1.27 per unit.
The power crisis in the country persists more than two weeks after the IPPs were paid their outstanding dues of over Rs300 billion, while all power consumers continue to experience power outages between 10 and 12 hours.
Atta believes the mafia controlling the distribution of electricity is out to defame the government by subjecting industries to load-shedding, a practice, he believes, has been carried forward from the tenure of the Pakistan Peoples Party (PPP) government.
“This government is quickly losing its image of a business-friendly regime,” he added.The issue is a matter of grave concern for the PML-N government, another expert adds, who believes industries in the Punjab are suffering the most.
Mian Fazal Ahmad says industries in the Punjab were suffering outages for close to eight hours on average in 2012, while they were now facing load-shedding for 10-12 hours on average. To make matters worse, he added, gas supplies, which was earlier available every four to five days a week, has now been curtailed to two and a half days. He explained that any “prudent” power manager would have ensured that the industries can at least operate for two shifts.
“With 12-14 hours supply, the industries that run 24 hours a day cannot run even two shifts,” Ahmad said, adding that the disruption has led to unemployment for hundreds in the Punjab.Mohsin Syed, an energy expert, says that the ministers should not believe what they are being fed by the bureaucracy.
“There are many industries in Punjab that are suffering minimal load shedding (2-4 hours) and that too at the time of their liking,” he said, adding that the case could be confirmed from the monthly bills of many such industries.
“The ministers should find out why select industries have been favored. Was it because of friendship or greed?” Syed went on to add that producing power from alternate fuels is two to three times more expensive than PEPCO-supplied power. An opportunity exists whereby the power supplier and the large power consumer could share the difference of higher cost if official power supply is not disrupted, he said, adding that an inquiry in this regard would make the picture clearer for the ruling elite.
He believed that a similar exercise may exist in gas supply, where the stakes are even higher, since the ruling elite has itself admitted that there is rampant corruption in the power sector.“As long as these opportunities exist, it will not be in the interest of the power suppliers to reduce load-shedding in industries,” Syed said.
The shortage has led many experts to say that the government has been hoodwinked by the IPPs and the bureaucracy. The power managers of the new government boasted that power generation would go up to 16,500MW during the summer after the government releases the entire amount to the IPPs. However, the independent power producers have come up short as they only produced 14,500MW on Friday, power sector experts pointed out.
The country is currently producing almost 6,000MW of hydel electricity while thermal and nuclear power stations are producing around 7,900MW and 600MW respectively, the experts added.
“We do not expect the country, at current capacities, to be able to produce 18,500MW, which is the peak demand during summer,” said Ghalib Atta, a power sector player. However, Atta said thermal power producers should be producing at least 10,000 MW instead of 7,900 MW, now that they’re free of the financial crunch. He also went on to add that the average cost of power would remain within reasonable limits during the summer as all gas-run IPPs had been activated and the huge supply of hydel electricity at Rs1.27 per unit.
The power crisis in the country persists more than two weeks after the IPPs were paid their outstanding dues of over Rs300 billion, while all power consumers continue to experience power outages between 10 and 12 hours.
Atta believes the mafia controlling the distribution of electricity is out to defame the government by subjecting industries to load-shedding, a practice, he believes, has been carried forward from the tenure of the Pakistan Peoples Party (PPP) government.
“This government is quickly losing its image of a business-friendly regime,” he added.The issue is a matter of grave concern for the PML-N government, another expert adds, who believes industries in the Punjab are suffering the most.
Mian Fazal Ahmad says industries in the Punjab were suffering outages for close to eight hours on average in 2012, while they were now facing load-shedding for 10-12 hours on average. To make matters worse, he added, gas supplies, which was earlier available every four to five days a week, has now been curtailed to two and a half days. He explained that any “prudent” power manager would have ensured that the industries can at least operate for two shifts.
“With 12-14 hours supply, the industries that run 24 hours a day cannot run even two shifts,” Ahmad said, adding that the disruption has led to unemployment for hundreds in the Punjab.Mohsin Syed, an energy expert, says that the ministers should not believe what they are being fed by the bureaucracy.
“There are many industries in Punjab that are suffering minimal load shedding (2-4 hours) and that too at the time of their liking,” he said, adding that the case could be confirmed from the monthly bills of many such industries.
“The ministers should find out why select industries have been favored. Was it because of friendship or greed?” Syed went on to add that producing power from alternate fuels is two to three times more expensive than PEPCO-supplied power. An opportunity exists whereby the power supplier and the large power consumer could share the difference of higher cost if official power supply is not disrupted, he said, adding that an inquiry in this regard would make the picture clearer for the ruling elite.
He believed that a similar exercise may exist in gas supply, where the stakes are even higher, since the ruling elite has itself admitted that there is rampant corruption in the power sector.“As long as these opportunities exist, it will not be in the interest of the power suppliers to reduce load-shedding in industries,” Syed said.
