Sub-Committee of Senate Standing Committee on Power in its meeting on Tuesday while discussing the issues of high tariff, capacity charges, heat rates and calculation of pay back periods of IPPs presented a detailed analysis of how the overpayments to Independent Power Plants have greatly contributed in the circular debt of the power sector and the private businesses have flourished while damaging the national exchequer owing mainly to the poorly and haphazardly designed agreements.
The meeting was held under the Chairmanship of Senator Nauman Wazir Khattak here at the Parliament House and was attended among others by Senator Agha Shahzaib Durrani, Senator Muhammad Akram, Bahadur Shah Acting Chairman NEPRA, Sajid Akram Additonal DG Tariff NEPRA and officials from the ministry and NEPRA.
The Committee took strong notice of the absence of the Minister and Secretary and observed that the issue under discussion is very important matter relating to circular debt, economy crises and ideally the minister should have been here to respond to the sub-committee’s queries.
According to the research conducted by the Committee major IPPs have enjoyed alarmingly high ratios of profit over the last few years which was termed to be mainly because of giving returns on profits instead of giving returns on the investment euity. The Committee observed that the state is overpaying these units and this cannot be happening without internal malafide of NEPRA who seems to be protecting IPPs. Senior officials from NEPRA told the committee that in these agreements and payments following international standard is of paramount importance and more than one financial principles including cash flow and accounting principles come into action.
The Committee put forward a list of questions before the ministry and NEPRA and sought answers in the next meeting. Members of the Committee were if the view that this extensive exercise is aimed not on individual cases but on the overall policy and at coming up with lessons and guidelines for such agreements in future.