Senate panel orders forensic audit of IPPs, warns of unrest over costly electricity

Islamabad [Pakistan], August 3 : A parliamentary panel in Pakistan has called for a forensic audit of the Independent Power Producers (IPPs) in Pakistan. This action was demanded due to the high costs of electricity bills, which could lead to potential unrest in the country, the Panel suggested, The News International reported.
The panel also noted that the public is paying billions of rupees each year to IPPs, regardless of whether they are producing electricity or not. The Pakistani lawmakers have highlighted an urgent need for crucial action to address the financial problems in the power sector and ensure greater transparency.
IPPs are draining the country's treasury; they receive an annual payment of PKR Rs 2000 billion as a capacity payment, despite the fact that the closed factories do not generate electricity, Business Recorder reported.
The Senate Standing Committee on Cabinet Secretariat, chaired by Senator Rana Mehmood-ul Hassan, received a briefing from energy sector regulators, including the National Electric Power Regulatory Authority (Nepra) and the Oil and Gas Regulatory Authority (OGRA).
According to The News International, a member of the parliamentary committee mentioned that "The current contracts with IPPs are draining the economy and causing undue hardship for citizens. A comprehensive forensic audit is essential to uncover irregularities and hold accountable those responsible for these inflated agreements."
The same report further mentioned that the parliamentary committee questioned NEPRA Chairman Waseem Mukhtar to gain clarity on the origins of the IPPs. Members inquired about the mistakes that led to overpriced deals with private generators, contributing to the current situation.
Another Pakistani Senator, Abdul Qadir, stressed on the importance of closely monitoring forensic audits so that all manipulation by what he termed the "IPPs mafia" can be prevented. Qadir also warned that the IPP group could obstruct efforts for transparency in the Power sector. Nepra Chairman Waseem Mukhtar explained that in 2007 and 2008, Pakistan experienced prolonged power outages due to insufficient generation capacity and increased terrorism, which discouraged investment
Meanwhile, there have been ongoing massive protests in Rawalpindi led by Jamaat e Islami Islamist Pakistan's chief, Hafiz Naeemur Rehman, who is demanding negotiations with IPPs, particularly regarding the payment clauses in US dollars. Additionally, they also demanded a reduction in taxes imposed on the middle class and want it redirected to the privileged class.
As the talks between the Jamaat-e-Islami and the government remain in limbo, Hafiz Naeemur Rehman said that their movement is aimed at saving the people from IPPs, who he said are looting the masses. Pakistan's energy sector has consistently struggled with inefficiencies and mismanagement, and IPP agreements are frequently criticised for being excessively favourable to private producers, to the detriment of the public.