Industrialists Demand Forensic Audit of IPPs 2024!

Introduction

Local traders and industrialists in Karachi are protesting against the high cost of electricity. They are demanding a forensic audit of Independent Power Producers (IPPs) and a revision of their contracts due to the unbearable tariffs that are causing factories to shut down.

Press Conference Highlights

Major Concerns

During a press conference at the Federation House on Monday, representatives from trade and industry expressed the concerns of Industrialists:

• High Energy Costs: Energy costs have become the biggest problem for Pakistan’s industries.
• Capacity Charges: Payment of Rs2 trillion in capacity charges to idle IPPs despite no electricity consumption.
• Factory Closures: This year, 25% of manufacturing units have already closed down.

Economic Impact

The representatives from Industrialists highlighted the severe economic impact of high energy costs:

• Factories shutting down every day.
• Difficulty in meeting tax targets due to the economic situation.

Industry-Unfriendly Tariffs

FPCCI’s Stand

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Vice President Saqib Fayyaz Maggo, along with SM Tanveer, former Minister of Industry and Trade from Punjab and Patron-in-Chief of the United Business Group, pointed out:

• Continuous Increase in Tariffs: Basic electricity tariffs are increasing every month.
• Idle Power Plants: Charges are being paid for power plants that are not functioning.

Capacity and Supply Issues

Maggo highlighted a significant issue:

Electricity Generation Capacity: Pakistan has the capacity to generate 43,000 megawatts of electricity.

Actual Supply: Only 23,000 megawatts are being supplied.

Capacity Charges: Capacity charges for the remaining 20,000 megawatts are being recovered from consumers.

Industrialists Demand Forensic Audit of IPPs

Financial Strain

Maggo emphasized that the current high power tariffs are unaffordable:

High Charges: The public and industry are paying Rs20 per unit of electricity in capacity charges.

Impact on Operations: It is not possible to run industries at these high power tariffs.

Calls for Action

Government Intervention

Maggo urged the government to take immediate action:

• Reduce Electricity Prices: Lowering electricity prices and capacity charges is crucial.
• Support for Industries: Without reducing these costs, industries will not be able to continue their operations.

Appeal to Political Parties

Maggo made an appeal to all political parties:

• 20-Year Industrial Policy: He called for a long-term industrial policy.
• Urgent Decisions Needed: He warned that if timely decisions are not made, the situation will worsen.

Conclusion

The high cost of electricity and the capacity charges are major concerns for Pakistan’s industrial sector. Local traders and industrialists are demanding a forensic audit of IPPs and a revision of their contracts to make electricity more affordable. Immediate government intervention and a long-term industrial policy are crucial to prevent further factory closures and economic decline.

References

• Press Conference at Federation House, Karachi
• Statements from FPCCI Vice President Saqib Fayyaz Maggo
• Comments from SM Tanveer, former Minister of Industry and Trade from Punjab

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