FPCCI urges government to resolve IPPs issues, reduceinterest rates to boost economic growth

LAHORE: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to address issues with independent power producers (IPPs), which, if managed effectively, could save the state Rs6 trillion annually and reduce interest rates by 4.0 per cent.

Former Punjab Minister and Patron-in-Chief of the United Business Group SM Tanveer addressed a press conference and expressed hope that the energy committee would announce positive developments next week.

He mentioned that, according to his sources, negotiations with IPPs are nearing completion and that a reduction in power rates could be imminent. He asked the government to waive capacity charges for non-procurement of power from public sector generation companies.

Tanveer explained that the final cost of power is Rs25 per unit, which includes generation, distribution, wheeling, and Discos’ expenses, with capacity charges being a significant burden. He suggested that if the process is streamlined, the exchequer could save Rs1 trillion annually.

During the press conference, experts highlighted another pressing issue: the high interest rate. Tanveer noted that the current central bank policy rate is 19.5 per cent, while inflation has decreased to 9.6 per cent. He pointed out that the high markup and power rates are stifling industrial growth.

He appealed to authorities to lower the rate by 4.0 percent following the State Bank of Pakistan’s monetary committee meeting on September 12. This reduction, he said, would provide much-needed relief to businesses and address the problem of money being tied up in bank deposits, where depositors receive higher interest income.

Tanveer further suggested that if inflation remains low, the markup should be reduced to 10 percent in the next monetary policy update in November. This, he added, would significantly ease debt servicing costs, which currently stand at Rs10 trillion.

A Rs4 trillion reduction in debt servicing could be redirected toward public welfare.FPCCI President Atif Ikram echoed these sentiments in his media address. The regional chairperson of the FPCCI also spoke on the occasion.