Published On: Thu, Jan 16th, 2014

A dark, black market in the private power sector

Corporate News (Pakistan News) power sector

Corporate News (Pakistan News)

According to several reports there has been unlawful handling in private power generation sector. Some corrupt government officials who have been receiving bogus capacity payments in light of the inability of the authorities to determine the actual efficiency of each power plant, have also been involved in this scandal.

According to experts this black market is proving to be a burden for the economy of the nation as it is not only leading to an increase in the circular debt but also increasing the power generation costs which at the end of the day is to be hurled on the shoulders of the general public.

The officials of the Ministry of Finance declared the clearing of Rs. 480 billion circular debt payment on account of idle capacity payments but they were not sure how much of these capacity claims were fake. However the officials admitted that the amount of Rs.270 billion which was paid to the (IPPs) with regard to circular debt could have been much lower if capacity claims were genuinely verified through an independent auditor. According to a valid source the IPP’s have been overcharging the government since the time they started producing electricity.

The real face of this scandal 

Corrupt elements embedded within the Central Power Purchasing Agency (CPPA) take advantage of the agreement which was inked between the IPPs and the government under which the government has to pay capacity charges if due to any reason the government decides not to purchase electricity.

The agreement also states that each power plant must be available for 91 percent of the time for generation of electricity. Therefore, when the plants are not available for power generation due to maintenance or some other issues the management of the plant informs the corrupt officials in the government not to place electricity demands momentarily due to which the government is liable to capacity payments.

Abdullah Yosuf, chairman of the IPPs Advisory Council, maintained that capacity payments are determined on the basis of a fixed formula, which includes the cost of running a power plant, rate of return and interest payments.


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