FPCCI demands Pakistan government to review arrangements with IPPs

FPCCI demands Pakistan government to review arrangements with IPPs

By: Communicators - Business Team (July 16, 2024)

Federation of Pakistan Chamber of Commerce and Industry (FPCCI) has urged the federal government to immediately review the power agreements with Independent Power Producers (IPPs) IPPs to save the country’s sinking industry as electricity tariff is unbearable due to capacity charges of IPPs.

FPCCI officials have demanded that presently, energy prices or tariff is the one the major and biggest problem in the country and directly hurting the industrialization in the country. Industrialists made it clear to the government that the industry cannot run until the energy prices not reduced. FPCCI in its budget proposals urged the government for reduction in the power tariff to make the domestic industry competitive in the world market; however, instead of reduction in electricity prices, the government has imposed fixed charges of Rs.1250, which has increased the cost of production.

Against the capacity of 45,000 MW, only 22,000 MW comes in the main transmission line, but the consumers have also to pay the cost of unutilized electricity. Industrialists have to pay 56 percent of the price in capacity charges due to unjustified contracts with IPPs. FPCCI on behalf of the entire business community’s demanded that the government should review the agreements awarded to IPPs, otherwise the industry will not be able to compete and survive.

Currently, the government is paying Rs 2 trillion on account of capacity charges. The government must decide that it want to save 40 people’s or 240 million Pakistani masses. Industry is unable to keep the factory operational at this power tariff and started shutting down operations, he said. Approximately 25 percent of industry has already shutdown due to high tariff and hundreds are in line to close the operation. FPCCI warned that this crisis will lead to increase the unemployment in the country and mass decline in the country’s exports. This will also resulted in lower tax revenue.

Revision of power tariff is a matter of urgency and the government must take immediate action to addresses this issue, otherwise once industry closes, can’t be revived. Business community is committed to support the country and the government to achieve a long-term growth and bring the $100 billion by end or 2030, but this needs to addresses the issues like power tariff to reduce the cost of production so our industry can compete in the international market.

FPCCI has urged the government to revise the contracts of IPPs and conduct Forensic audit of IPPs by international firm in next two weeks to save the country’s industry.