An audit report on power sector of Pakistan has revealed significant facts about the sector’s current performance and solutions to its issues.
The report was presented to the Prime Minister Imran Khan for his review last week.
The report candidly suggests that if the government wants to produce electricity at reduced cost, the only option is to go for re-agreement with the Independent Power Producers or IPPs. If an IPP refuses to accept the agreement, the government must immediately order its forensic audit.
The government must take a strict route to stop the IPPs from blackmailing the authorities, the report says.
The new agreements with the IPPs should be on simple terms of exchange of service for payments. If the IPPs still try to weigh down on the government, the government may retire 11 IPPs permitted through 1994 and 2002 power sector policy through which the government may save up to Rs740 billion.
According to the report, the government had provided power consumers a subsidy of Rs3,202 billion between 2007 and 2019. Owing to this, the circular debt reached Rs4,802 billion. During 2016, the total capacity payment was Rs275 billion.
The electricity production during 2019 increased to 12 megawatts due to which the capacity payments reached Rs640 billion. The capacity payment for fiscal year 2020-2021 is Rs900 billion.