FPCCI demands forensic audit of private power producers

KARACHI: Pakistan’s apex trade body on Thursday suggested the government to conduct a forensic audit on issues related to the Independent Power Producers (IPPs), including high electricity cost.

“FPCCI (Federation of Pakistan Chambers of Commerce & Industry) demands forensic audit of IPPs matter, besides impeachment of those, who are responsible, without any discrimination in the larger national interest and for the sake of country,” Mian Anjum Nisar, president FPCCI said in a statement.

Nisar said it was imperative to make power and gas tariffs for domestic as well as export sectors compatible to tariff being applied in regional and neighboring countries.

“The industry is presently paying around Rs24/unit of electricity as compared with regional tariff of about 7.5 cents/unit in regional countries,” he said and added that low energy tariff was the only way to ensure more investment in the country.

He said the huge rise in energy tariffs is due to excessive capacity payment to IPPs in dollars, leading to further addition in public debt of the government, which ultimately passed on to the end consumers in the form of hike in fuel surcharges.

“The major reason of growing circular debt is the sovereign guarantees of rate of return to IPPs in terms of dollars not rupees while continued depreciation of local currency against dollar in the past also amounted to losses in trillions.”

Nisar said the inquiry report on power sector stirred fierce debate on the energy crisis of Pakistan and its identified link to the IPPs. The cabinet had approved to public the findings of the PM enquiry committee report, forensic audit of the IPPs and establishment of the commission to probe the matter.

He said the country can improve economic growth and job creation by overcoming inefficiencies in its power sector, which needs to focus on eliminating waste, promoting the shift towards

cleaner energy and attracting private investments.

“Now, after an agreement has been finalized with the IPPs, the power sector reforms should be a top priority for a quick yield of economic gains.”

Nisar said reforms that focus solely on rising energy prices had already led to an excessively high cost of electricity because of inefficiencies in the system, negatively impacting the industrial cost.

“Increase in tariffs alone could solve the fiscal problems in short-term but on the long-term basis it cannot address the energy sector issues.”

FPCCI president said the overall line losses of distribution companies in the public sector remained unchanged at 18.3 percent for the last several years (10 to 35 percent) while the current Unaccounted For Gas losses of gas companies are causing a loss of more than Rs50 billion to the end consumers, “burdening the industry with billions of rupees cost additionally”.

The FPCCI chief suggested the government’s next target should be reforms in DISCOs to further cut the cost of production, which was very high owing to ever-increasing energy tariffs, expensive fuel, and continued weakening of rupee along with rising import duties on industrial raw material.