MPs panel expresses grave concern over IPPs, power sector issues

ISLAMABAD: A parliamentary committee scrutinizing the power sector of the country on Friday voiced serious concerns on overbilling, burden and performance of Independent Power Producers (IPPs) and has decided to seek a detailed briefing from the Power Division in its next meeting.

During the Senate Standing Committee meeting chaired by Mohammad Idris, MNA Dr Fazal Chaudhry highlighted the pressing issue of IPPs, calling for a focused meeting to review their agreements and explore strategies to reduce costs. He urged the committee to support the government if it encounters limitations in providing relief to power consumers.

MNA Sheikh Aftab Ahmad also backed the call for a dedicated meeting on IPP issues and questioned the recent sharp increase in power bills.

Dr Fakhre Alam Irfan, Secretary of the Power Division, addressed concerns about the Rs2.3 trillion circular debt in the power sector. He noted that the International Monetary Fund (IMF) is pressuring the government to avoid increasing debt and to recover interest from consumers in their power bills.

K-Electric briefed the committee on its financial status, reporting losses of Rs30 billion last year. The utility’s CEO stated that K-Electric’s total demand is 3,500 MW, with 1,100 to 1,200 MW sourced from the national grid and the remainder generated by its own power plants. The CEO clarified that consumers do not bear these losses as the company absorbs the cost.

The CEO also informed the committee that 2,000 MW has been added to the national grid since the company’s privatization, and K-Electric’s losses have been reduced from 40 percent to 15 percent during the same period.

Committee members questioned the continued government subsidies to K-Electric, a privatized entity. The secretary of the Power Division explained that uniform tariffs mandated by parliament require subsidization for K-Electric consumers. High generation costs, due to expensive thermal resources such as oil and gas, necessitate these subsidies.

MNA Amir Dogar proposed increasing the ceiling for the 200-unit slab to 250 units to alleviate sudden jumps in electricity bills. He criticized the high utility costs and restricted freedom to protest, describing the situation as intolerable.

Hyderabad Electric Supply Company (Hesco) also briefed the panel, revealing that out of its 629 feeders, 318 experience losses exceeding 80% and endure 12 hours of loadshedding. Hesco’s average losses stand at 27 percent, amounting to Rs205 billion in receivables.

When questioned about the annual losses, Hesco’s CEO reported monthly losses of Rs1.5 billion, totaling Rs18 billion annually, primarily due to theft. However, the Power Division’s Joint Secretary Technical stated that Hesco’s share of Rs590 billion in losses across distribution companies (Discos) is Rs53 billion. The discrepancy between the CEO’s and Power Division’s figures remained unresolved to the committee’s satisfaction.

In Tesco’s service area, approximately 1 million domestic consumers face severe restrictions, with only 4,700 metered connections and just 4 hours of electricity daily, despite receiving Rs67 billion in subsidies.