ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has moved the Supreme Court of Pakistan for a forensic audit of independent power producers (IPPs), amid a worsening cost-of-living crisis in the South Asian country.
The development comes amid protests in Rawalpindi and Karachi by thousands of supporters of the Jamaat-e-Islami (JI) religio-political party, who have been calling for a review of Pakistan’s loss-making agreements with IPPs, reduction in power tariffs, revocation of additional taxes introduced in the last budget and other similar measures.
Pakistan has the highest electricity tariffs in the region and the government is currently on track to pay Rs2.1 trillion to the IPPs in capacity payments this fiscal year, while circular debt for the energy sector in 2024 reached Rs. 5.422 trillion. At the same time, numerous IPPs are being paid billions despite not producing any electricity.
All IPP contracts for the sale of electricity are structured in two tiers. First, the power purchaser is required to make “capacity payments,” which are required to cover all fixed costs of the IPPs, including debt repayments as well as Operations and Management costs (O&M Costs) and return on equity (RoE) at a stipulated rate, according to the FPCCI.
These capacity payments are to be made by the power purchaser whether or not any electricity is actually purchased. In addition to capacity payments, there is a variable cost attributable to the production of energy above a certain plant capacity factor (normally 60 percent). In other words, if more than 60 percent of a plant’s capacity is utilized for electricity generation, then the relevant IPP is entitled to additional payments. Fuel cost is treated as a pass-through item.
“In the light of the foregoing, it is respectfully prayed that this Honourable Court may be graciously pleased to direct the Government of Pakistan to commission a detailed and thorough forensic audit of all IPPs,” the FPCCI prayed in its petition, urging for the recovery of excess profits earned by IPPs, renegotiating all IPP agreements, and removing anomalies regarding the calculation of Internal Rate of Returns (IRR) on equity investments in all IPP agreements.
The FPCCI referred to a 288-page report by Committee for Power Sector Audit, Circular Debt Resolution and Future Roadmap from 2020, which it said identified more than Rs100 billion worth of excess payments made to IPPs and recommended a number of steps to identify power sector problems, including conducting a forensic audit and the recovery of prior excess payments.
“Till date, no such audit has been conducted nor have any prior excess payments been recovered. More importantly, there is no public explanation for why the 2020 Report remains unimplemented,” it noted. “Pakistan’s power sector is a thus a paradigmatic example of regulatory capture, where year after year the people of Pakistan continue to suffer at the hands of predatory elites.”
The FPCCI said the current situation was not only placing an “unbearable burden” on domestic consumers, but it was also forcing industries to either go off-grid or shut down, while the government was trying to recover higher and higher tariffs from a smaller and smaller pool of customers.
One of the main reasons for Pakistan’s perennial economic crisis is its electricity sector. Pakistan is on track this year to pay approximately Rs3.58 trillion in payments to electricity generating companies. Out of this total amount, approximately Rs2.63 trillion is likely to be recovered, while the remainder will be subsidised by the government. This unrecovered amount will be added to already existing circular debt of Rs5.422 trillion, according to the petition.
Currently, Pakistan has installed generation capacity of 45,885MW. Out of this, 23,860MW (52 percent) has been installed by state-owned entities (both federal and provincial), while the remaining capacity of 22,043MW (48 percent) has been installed by IPPs. It is important to note that as against its installed generation capacity of 45,885MW, the maximum power demand during the summers is around 30,000MW while winter peak loads are closer to 12,000MW.
Notwithstanding this current oversupply of electricity, IPPs are scheduled to add another 7,460MW of electricity by 2032. This capacity is in addition to the 11,550MW due to be added through the government’s own projects (4,320MW Dasu Hydroelectric Project due for completion in 2026, 4,500MW Diamer-Basha Hydroelectric Project due in 2029, 1,530MW Tarbela 5 extension due in 2026, and 1,200 MW Chashma 5 nuclear plant due for completion in 2031.
“It is estimated that during the current financial year (i.e. 2024 – 2025), capacity payments will total Rs2.1 trillion (equal to about 1.9 percent of GDP). In FY 2023-24, 45 percent of capacity payments were made to the government-owned plants, 15 percent to private parties (mostly local) and 40 percent to IPPs set up under CPEC (China-Pakistan Economic Corridor),” the FPCCI said.
“Notwithstanding the trillions being paid as capacity charges to the IPPs, actual capacity utilization of the IPPs is very low. In some cases, IPPs are getting paid billions in capacity charges without generating a single unit.”
It said it was also important to note the exponential manner in which such charges had increased.
“In 2015, an average of 13,000MW electricity was being consumed with capacity charges of Rs200 bn (against an installed capacity of about 20,000 MW). Today, consumption still averages around 13,000MW but capacity charges have increased by more than 1000 percent to Rs2.1 tr (against an installed capacity of about 45,885 MW),” the FPCCI added.
Pakistani industrialists move top court for forensic audit of independent power producers
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Pakistani industrialists move top court for forensic audit of independent power producers
- The development comes amid protests in Rawalpindi, Karachi for reduction in power tariffs and review of Pakistan’s loss-making agreements with IPPs
- Pakistan has highest tariffs in the region and the government is currently on track to pay Rs2.1 trillion to IPPs in capacity payments this fiscal year
Pakistani province launches helicopter service to evacuate people, dispatch aid to clashes-hit district
- Clashes between Sunni, Shia tribes have killed over 100 people in Kurram since last month
- On Friday, authorities set a deadline of Feb. 1 for the warring tribes to surrender weapons
PESHAWAR: Pakistan’s northwestern Khyber Pakhtunkhwa (KP) province has launched a helicopter service to evacuate people and transport aid to Kurram district that has been hit by sectarian clashes in recent weeks, officials said on Sunday.
Kurram, a tribal district of around 600,000 near Pakistan’s border with Afghanistan where federal and provincial authorities have traditionally exerted limited control, has been a flashpoint for sectarian tensions between Shia and Sunni tribes for decades.
Fresh clashes that erupted last month have killed more than a hundred people, triggering a humanitarian crisis with reports of starvation, lack of medicine and oxygen shortages following the blocking of the main highway connecting Kurram’s main city of Parachinar to the provincial capital of Peshawar.
In response to the problems being faced by residents, the KP administration has been facilitating travel between Parachinar and Peshawar. On Sunday, two flights evacuated 27 individuals as well as carried 16 government staffers and members of a tribal council, which has been striving to achieve peace, to Kurram.
“There is no fare involved in transportation of people or medicines via the helicopter, rather it is a voluntary service by the KP government to meet the emergency situation,” Nisar Muhammad Khan, a KP government official, told Arab News.
The helicopter service was also being used to dispatch medicines to Parachinar. A day ago, 53 individuals, including 14 patients, were shifted to Peshawar from Kurram via helicopter, according to the provincial authorities.
A third flight was scheduled to bring people stranded in the Tal area back to Parachinar, while five more flights were expected to relocate over a hundred people on Sunday, according to the provincial government.
Chief Minister Ali Amin Gandapur’s office said the government had so far dispatched 1,850 kilograms of medical supplies to Kurram, assuring that it would mobilize all resources to ease problems of the people and ensure durable peace in the region.
The development comes days after the KP authorities set a deadline of Feb. 1 for warring Sunni and Shia tribes in the district to surrender all weapons and dismantle their bunkers to stem sectarian clashes in the region.
The decision was made at a meeting of the KP apex committee, which comprises civilian and military officials, to discuss a sustainable solution to the issue. It allowed the launch of a special air service for temporary evacuation from some parts of Kurram to protect people’s lives, according to the apex committee declaration.
“The agreement outlines that both sides will submit a detailed action plan within 15 days for voluntary submission of weapons,” read a declaration issued after the apex committee meeting.
“All weapons are to be deposited with the local administration by February 1. Additionally, it was decided that all bunkers in the area will be dismantled by the same deadline.”
In the meantime, land routes to the area would be opened intermittently on humanitarian grounds and a mechanism was put in place for secure transportation, according to the statement.
“Personnel of police and Frontier Corps will jointly provide security to the convoys,” it read.
Last month’s clashes erupted after rival tribes attacked convoys of passengers on the Parachinar-Peshawar road, which were followed by attacks on each other’s villages.
The apex committee asked both sides to avoid any violent action in the future to keep the land route safe and open at all times, hoping that the parties would fully cooperate with the government for a lasting solution to the issue.
Champions Trophy preparations in full swing as Karachi stadium upgradation nears completion
- PCB Chairman Mohsin Naqvi says the National Stadium will be ready well before the ICC tournament
- He says the PCB is improving facilities for Pakistani cricket fans to ensure they have a better experience
ISLAMABAD: Preparations for the ICC Champions Trophy 2025 are progressing rapidly, with the upgradation of Karachi’s National Stadium nearing completion, Pakistan Cricket Board (PCB) Chairman Mohsin Naqvi said on Sunday during a visit to the venue.
The tournament, scheduled for February 2025, has been at the center of controversy following India's reluctance to play in Pakistan due to strained political ties.
The International Cricket Council resolved the impasse by approving a hybrid model, allowing India’s matches to be held at neutral venues while other teams play in Pakistan. The decision ensured India’s participation while retaining Pakistan as the official host.
“Remarkable progress has been made in a very short time,” Naqvi was quoted in a PCB statement. “The upgradation of the National Stadium will be completed well before the Champions Trophy tournament.”
During the visit, Naqvi reviewed ongoing projects, including the installation of new seats in enclosures, enhanced parking facilities for 2,700 vehicles and finishing work on the stadium building.
He also instructed officials to expedite the installation of LED lights and scoreboards.
“We are improving facilities for cricket fans to ensure they have a better experience,” he added.
The PCB is under pressure to ensure the country is ready to host the major ICC tournament.
Security concerns and political tensions had previously kept high-profile international cricket events away, but recent improvements in safety and infrastructure have bolstered Pakistan’s case as a venue.
Praising the rapid progress at the National Stadium, Naqvi lauded the project team for their dedication.
“I congratulate the entire team for their outstanding and swift work,” he said.
The Champions Trophy is seen as a pivotal moment for Pakistan cricket, with the PCB aiming to deliver a world-class tournament to reaffirm the country’s ability to host international events successfully.
Students in Pakistan’s north embark on over 150-kilometer march for road safety awareness
- The marchers aim to press the government to built tunnels on 167-kilometer Juglot-Skardu Road to avoid accidents, blockades
- They say the original construction plan of JSR included five tunnels, but not a single one was constructed by authorities
KHAPLU, Gilgit-Baltistan: A group of students on Saturday embarked on a more than 150-kilometer march from Pakistan’s northern Gilgit district to Skardu, aiming to raise awareness about road safety.
The marchers called for making the 167-km single-carriage Juglot-Skardu Road (JSR), which connects the Gilgit division with Skardu district in the Baltistan division, safer for travelers by building tunnels at various locations prone to landslides in the mountainous region.
Skardu is a major tourism, trekking and mountaineering hub in Pakistan’s northern Gilgit-Baltistan region and home to Askole and Hushe villages, often referred to as gateways to snow-capped peaks, including K2, the Gasherbrums and Broad Peak, as well as the Baltoro, Biafo and Trango glaciers.
“We are marching just with a single agenda and our slogan is: ‘Build tunnels, save lives,’” Shehbaz Shareef, a member of the Baltistan Students Federation (BSF), told Arab News.
“We have organized this walk to raise awareness about the need for safer and reliable routes between Skardu and other parts of the country.”
Shareef said the original construction plan for JSR included five tunnels, but none were built.
“This route has been constructed by FWO [Frontier Works Organization],” he added. “However, the tunnels were not built, and this road has become more dangerous.”
Arab News contacted FWO, a construction and engineering organization managed by the Pakistan Army, for its version. However, it was referred to the local chapter of the military’s media wing, Inter-Services Public Relations, which did not respond to the query until the filing of this report.
The Awami Action Committee (AAC), a civic rights body in the region, announced its support for the march.
“We are very thankful to the BSF who are raising a very important issue. They are demanding the government to make this road safer through this march because this road is the only land route to the Baltistan division,” Najaf Ali, chairman of the AAC Baltistan chapter, told Arab News.
“It has become a well of death. Accidents are common on this road, and it has devoured many precious lives. A few days ago, five people were killed after a landslide buried their car. We have grown tired of lifting bodies due to accidents.”
Ali urged the government to build the requisite tunnels on the road.
“This is a matter of life and death, so we are with the students, and we will warmly receive them in Skardu,” he said. “Additionally, we also held a meeting with trade bodies and decided to launch a big drive to press the government to make this road safe.”
Mesam Kazim, opposition leader in the Gilgit-Baltistan Assembly, said they would do their utmost to press the government for the construction of tunnels on JSR.
“In 2022, we adopted a unanimous resolution demanding the federal government to order the construction of tunnels on the Gilgit-Skardu road to avoid frequent blockades of the artery due to landslides,” Kazim said.
“In the initial PC-1 [survey] uploaded by NHA [National Highway Authority], the construction of tunnels was part of the plan. Tunnels have been missed, and international standards [of construction] have been violated by FWO on JSR.”
He lamented that there were no parking lots, safety barriers, or speed limit boards on the road, and more than 100 people had lost their lives in accidents on JSR over the last few years.
“Who is responsible for these casualties?” Kazim questioned.
Pakistan arrests two human smugglers linked to deadly Greek boat tragedy
- FIA says Muhammad Aslam and Saeed Ahmed were arrested in separate operations from Gujranwala and Gurjat
- Investigations reveal victims of the boat tragedy paid over $30,000 after being promised safe passage to Europe
KARACHI: Pakistani authorities on Sunday arrested two men involved in a recent boat tragedy off the coast of Greece that killed at least five nationals, as part of an intensified crackdown on human smuggling networks, the Federal Investigation Agency (FIA) said.
The arrests come in the wake of a boat disaster last week near the Greek island of Gavdos, which highlighted the perilous journeys many migrants undertake, often driven by conflicts in the Middle East. In the case of Pakistani nationals, economic challenges push many young individuals to attempt dangerous crossings to Europe in search of better financial prospects.
The issue illegal immigrations to Europe came under greater scrutiny in the country last year when hundreds of migrants, including 262 Pakistanis, drowned after an overcrowded vessel capsized off the southwestern Greek coastal town of Pylos.
The FIA said it apprehended Muhammad Aslam and Saeed Ahmed in separate operations following directives from Prime Minister Shehbaz Sharif to target those facilitating illegal migration.
The Pakistani agency informed Aslam was part of an international human smuggling ring and was accused of orchestrating the ill-fated journey that saw Pakistani migrants taken to Libya before being put on a boat bound for Greece.
“Using advanced technology, Aslam was tracked and arrested in Gujranwala,” the FIA statement said, adding the second suspect was arrested in Gujrat district located in the eastern Punjab province and was accused of creating fake travel documents and charging large sums for his services.
The statement informed Aslam extorted Rs8.5 million ($30,660) from victims by promising safe passage to Europe.
The Pakistani premier called for enhanced cooperation with international agencies earlier this month, seeking swift action against human trafficking networks. He also instructed the FIA to compile a detailed report on migration-related incidents over the past year and implement an Integrated Border Management System (IBMS) to monitor and prevent illegal movement.
The FIA said in its statement it had formed special teams to track other suspects linked to human smuggling rings.
“We will use all available resources to arrest those playing with innocent lives,” Abdul Qadir Qamar, the director of the FIA’s Gujranwala zone, was quoted as saying in the statement.
Authorities have presented 174 human smuggling cases in court this year, with four convictions reported so far. The government has also decided to launch a public awareness campaign to discourage dangerous migration attempts.
“Concrete evidence will ensure the culprits face severe punishment,” Qamar added, emphasizing the government’s commitment to preventing such tragedies.
Pakistan government forms committee to negotiate with Imran Khan’s party amid growing polarization
- Development comes after Khan threatened civil disobedience in the country, seeking release of political prisoners
- Government acknowledges talks can help break the current impasse which has also impacted national economy
ISLAMABAD: The government on Sunday formed a committee to hold talks with the opposition Pakistan Tehreek-e-Insaf (PTI) party, state media reported, to discuss a range of issues causing political polarization that has also impacted the country’s fragile economy.
The move comes after PTI founder and former Prime Minister Imran Khan threatened to launch civil disobedience by urging overseas Pakistanis, a key support base for his party, to halt remittances if the government does not meet his demands, including the release of political prisoners, by Dec. 22.
Khan, who has been imprisoned for over a year on charges he claims are politically motivated, has also called for judicial commissions to investigate violent protests on May 9 last year and Nov. 26 this year, which the government says involved his party supporters.
“Prime Minister Shehbaz Sharif has formed a committee comprising government members,” state-owned Pakistan Television News reported. “This committee will hold negotiations with Pakistan Tehreek-e-Insaf.”
The formation of the government’s negotiating team followed a meeting between PTI Chairman Barrister Gohar Khan and National Assembly Speaker Sardar Ayaz Sadiq on Saturday evening in which Gohar requested the creation of a parliamentary committee to facilitate dialogue. Sadiq subsequently approached the Prime Minister, urging him to nominate representatives for the talks.
The government’s committee includes key figures from the ruling Pakistan Muslim League-Nawaz (PML-N), such as Deputy Prime Minister Ishaq Dar, Political Adviser Rana Sanaullah and Senator Irfan Siddiqui, alongside representatives from allied parties. PTI has already established its own negotiating team.
The development comes a day after Pakistan’s military announced prison sentences for 25 people involved in the May 9, 2023, protests, which PTI has demanded be investigated. The military said it had gathered “irrefutable evidence” against those prosecuted and reiterated its commitment to bringing the planners of the violence to justice.
The announcement has raised concerns among supporters of former Prime Minister Imran Khan, who faces charges of inciting attacks against the armed forces and may potentially be tried in a military court.
The country has remained gripped by political unrest and uncertainty since Khan’s ouster from power through a parliamentary no-confidence vote, which has also exacerbated Pakistan’s economic hardships.
Senior government representatives have recently acknowledged that negotiations could offer a pathway out of the current political impasse. However, they have cautioned that it is too early to determine which of PTI’s demands might be addressed.
