In recent weeks, there has been an intense debate linking high electricity prices in Pakistan to costly power purchase agreements with Independent Power Producers (IPPs). These agreements, criticized for their unfavorable terms, have led to IPPs receiving capacity payments, which financially burden the citizens.
Khawar Ghumman highlighted this issue in a comprehensive report, he identified the five most expensive IPPs in Pakistan:
1. Rousch Power Plant: Established in 1999 for 30 years, it charges 745 PKR per unit of electricity.
2. China Power Hub: Produces electricity at 350 PKR per unit.
3. Port Qasim Electric: Supplies electricity at 177 PKR per unit.
4. Saba Power Plant: Also founded in 1999 for 30 years, it charges 117 PKR per unit.
5. Pakgen Power Plant: Produces electricity at 95 PKR per unit.
Understanding Capacity Payments
Capacity payments are monthly fees paid by consumers to power-producing companies to maintain their ability to generate electricity, ensuring they can meet additional demand if necessary. These payments are made in US dollars rather than Pakistani rupees.
Former caretaker commerce minister Gohar Ejaz has been actively raising awareness about these issues through his statements and social media, warning that if these governmental mistakes are not corrected, Pakistan’s economic conditions will further deteriorate.
