Islamabad, August 26, 2023 – Ahsan Zafar Bakhtawari, President of the Islamabad Chamber of Commerce and Industry (ICCI), has identified the root cause of the mounting circular debt and escalating power tariffs as the power purchase agreements (PPAs) signed with International Power Producers (IPPs).
In response, he has called upon the government to revisit these agreements and make payments to IPPs in the local currency, according to a press release issued on Saturday.
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Addressing the media at the Chambers House, President Bakhtawari emphasized that IPPs were reaping substantial profits in dollars, while businesses were grappling with exorbitant power tariffs and the rising cost of conducting business. He urged the government to revise the fundamental tariff structure of IPPs in Pakistani Rupees (PKR) instead of US dollars, a change that could save billions of rupees from the national exchequer and provide affordable electricity to businesses. This, he argued, would enhance the competitiveness of Pakistani exports in the international market.
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Additionally, President Bakhtawari advocated for IPPs to be paid in local currency rather than US dollars for their profits. Faad Waheed, Senior Vice President of ICCI, highlighted that approximately 47 IPPs were operating in Pakistan’s power sector, and they had already accrued significant profits in comparison to their initial capital investment. As per the Power Policy of 1994, 16 IPPs had invested around Rs. 60 billion but had earned over Rs. 400 billion, underscoring the substantial profits they had made within Pakistan.
Waheed pointed out that PPAs in Pakistan had contributed to making energy costs the highest in the region and urged the government to renegotiate these agreements in the best interests of the nation, particularly to safeguard the industry.
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Zafar Bakhtawari, former President of ICCI and Secretary General of UBG, emphasized that the depreciation of the Pakistani rupee had led to a significant increase in the cost of importing industrial raw materials, exacerbating production costs. He called on the government to take immediate measures to stabilize the value of the rupee to alleviate industry woes.
Bakhtawari also urged the government to focus on curbing transmission and distribution losses, tackling power theft, and enhancing the performance of power companies as alternatives to increasing power tariffs. This approach, he argued, would prevent consumers from bearing additional burdens.
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The Islamabad Chamber’s stance reflects the concerns of various stakeholders in Pakistan who are grappling with the complex issue of power tariffs and their impact on the national economy. The call for a review of PPAs and a focus on strengthening the local currency is part of a wider dialogue on energy policy in the country.
