The Senate Standing Committee on Power on Tuesday urged the government to review agreements of independent power producers (IPPs) after officials indicated this would benefit the public.
The committee’s meeting occurred amidst a surge in electricity prices that has triggered protests nationwide, with consumers refusing to pay their bills and demanding “relief” from the government. It was provided a detailed briefing on the prevailing situation by the Power Division.
According to the briefing, 63.5% of domestic consumers did not experience any tariff increase in the last fiscal year. Officials said 31.6% of domestic consumers saw their tariffs rise by Rs. 3-6.5/unit, while 4.9% of domestic consumers saw an increase of Rs. 7.5/unit. The average tariff increase for domestic consumers equaled Rs. 3.82/unit, the committee was informed, while all other categories saw a tariff increase of Rs. 7.5/unit.
Detailing budgeted subsidies for fiscal year 2023-24, the committee was informed that Rs. 976 billion had been allocated for the power sector. Of this, it was told, Rs. 158 billion has been set aside for distribution companies; Rs. 169 billion for K-Electric; and Rs. 82 billion for interest-related expenses of the Power Holding Company. An additional subsidy of Rs. 126 billion has also been designated for KE.
During the meeting, lawmakers urged the authorities to make policies that protect from tariff increases power consumers utilizing up to 200 units of electricity monthly. They also slammed the failure of distribution companies in reducing power theft, noting consumers were paying for the deficiencies of the companies.
Senator Saifullah Abro stressed on a comprehensive review of IPP agreements, re-evaluation of prices, and improved oversight to prevent over-invoicing. He also noted a need to examine the energy infrastructure for fraud. Expressing concern over the IPPs’ payment criteria, the committee demanded greater transparency and criticized the Central Power Purchasing Agency (CPPA) for lacking detailed knowledge of finances.
Senator Bahramand Khan Tangi alleged employees of power distribution companies were involved in corruption and were facilitating people in power theft without any accountability. To the Power Division maintaining that it could not take any action that risked deviation from commitments to the International Monetary Fund (IMF), Tangi said they shouldn’t blame the global lender for their failings. “The IMF is not stopping you from reducing theft and losses. Power companies’ employees are involved in corruption and nobody is there to check them,” he said.
The committee also sought details about the 44,943MW installed electricity capacity, with the Power Division unable to provide a satisfactory answer. The panel was informed the current infrastructure could support consumption of 26,000MW. It was also told that IPP agreements require payment of capacity charges even during annual maintenance shutdowns.
The panel further inquired about the policies aimed at addressing electricity theft and illegal connections, with officials claiming 78,000 FIRs had been filed as well as complaints against 12,000 individuals.
The committee expressed frustration over the Power Division’s “convoluted” policies and called for more transparent and user-friendly initiatives, especially for the vulnerable segments of society. They also suggested awareness campaigns detailing any relief measures.