The government’s investigators have expanded their probe into dozens of Independent Power Producers (IPPs) as some owners resist, citing adherence to contractual agreements. Sources from the power sector revealed that investigators are examining data and documents collected from the companies’ offices and plants.
Reports indicate that some plant owners are hesitant to terminate contracts based on the current net value of their Return on Equity (RoE). In a bid to cut costs, Pakistan is renegotiating power deals with IPPs, potentially retiring some from the system to save on payments excluding RoE and offering present net value for the remaining life of the IPP, saving billions of rupees.
Minister for Power Awais Leghari has emphasized that the government will not unilaterally alter any IPP pacts without the owners’ consent to avoid international litigation. The government has summoned owners of some IPPs, urging them to propose solutions as the current tariff is unsustainable for the industry and society. However, critics have launched a campaign against the investigators for not consulting power sector experts.
Pl, subscribe to the YouTube channel of republicpolicy.com
Some IPP owners, except Chinese plants, are reportedly leveraging international lenders to pressure the government into conceding on revising the deals. The Task Force mandated to probe IPP contracts is conducting meetings in a secret location in Rawalpindi.
Allegations of “fictitious loading of production cost” against nine IPPs and KE have been included in the probe, based on an investigation by the SECP in August 2013. The SECP’s actions include financial analysis, inspection orders, coordination with NEPRA, and feedback from statutory auditors.
Efficiency audits have been conducted on several power companies, and the SECP reported reluctance from many IPPs to cooperate with the inspection, with some even filing appeals and obtaining stays from the courts.
Insiders from NEPRA revealed that officials from Power Division’s organizations involved in the probe are staying silent, fearing scrutiny. Meanwhile, lawyers knowledgeable about IPP affairs are gearing up for potential prolonged litigation at local and international levels.
