Negotiations with IPPs | Right sizing: By IA Hashmi

 

Federal Energy Minister Owais Laghari while giving an interview to a prominent foreign news agency yesterday said that the government is negotiating with the IPPs to revise the agreements. He acknowledged that the current system of electricity pricing in Pakistan is unsustainable which is harming the country's development, both power producers and the government understand that the current situation cannot be sustained and therefore all stakeholders must focus on business interests. By compromising to the extent, the consumers should be provided with an early discount. Undoubtedly, if there is one of the biggest reasons for the economic crisis that Pakistan is facing for many years, then there may be no other reason except the extraordinary price of electricity. can be done This problem is the most troublesome for all industries from the common consumer to the small and big ones. The main reason for the inflation of all industrial and agricultural commodities is the continuous increase in electricity prices.

Compared to all other countries in the region, Pakistan has the highest electricity rates per unit due to which our industrial and agricultural production has lost its ability to compete in the global markets. Due to the fact that the prices of many goods manufactured and produced in the country are very high compared to other countries, they are being smuggled into the country or are being regularly imported. This situation has made the balance of payments of trade permanently negative as our exports are significantly less than our imports, meaning we have been buying more and selling less, which has led to borrowing to cover domestic expenditure. Borrowing has become our compulsion. The increasing burden of debt has made the country suffer from continuous degradation. To get out of this destructive cycle, it is necessary to reduce the electricity rates and bring them to the level of other countries in the region. Compared to the entire region, the reason for the high cost of electricity in our country is the Independent Power Producers, with whom all the past governments in the last three decades have signed contracts for the production of electricity on terms that cannot be called fair in any way.

According to these conditions, the government is not only obliged to pay the IPPs in dollars instead of local currency, but the contract requires them to pay these institutions according to their full production capacity, even if the domestic demand is low. Whether electricity is used or not. The result is that over the years, billions of dollars have been paid to these companies for electricity they did not generate. Due to this, the burden of revolving debt is increasing and the country has suffered a loss of about 5082 billion rupees in the last fifteen years. Due to this situation, it is inevitable to change the terms of the agreements made with the power companies according to the national interests. In his interview, the Federal Minister of Energy did not say what changes are being discussed in the contracts with the IPPs, but according to some sources in the power sector, the changes demanded by the government in the contracts include guaranteed returns. These include reductions, capping of dollar rates and elimination of the requirement to pay for unused electricity. These conditions are certainly fair and reasonable and should be agreed upon as soon as possible. According to the information available in Azad Power Plants, most of the owners are Pakistanis whose patriotism requires them to accept these changes in the contracts. Do not hesitate to do anything so that the national economy can be saved from the quagmire it is stuck in and the country can move on the path of development and stability.

Right Sizing:

Prime Minister Shehbaz Sharif along with his economic team is taking on Rozwal to manage the bankrupt economy and take the necessary steps to help it flourish. The main focus of the government initiatives is to reduce the annual budget by billions of rupees by bringing the government expenditure to the lowest possible level. Under this objective, departments that do not give fruitful results and such ministries that meet the requirements of the current and future era. According to a media report, it has been decided to amend the Civil Servants Act, 1973 to provide a financial package to the affected employees under the Right Sizing scheme.

The Establishment Division will refer the proposed amendments to the Committee on Legal Cases of the Cabinet. A new interpretation will be added in Section 2, which deals with financial package to the affected employees. Declaring a balanced package, it has been clarified that it will take into account the rights of civil servants and the responsibilities of the federal government. According to the clause added in this regard, the Prime Minister will form a committee, where The employees will have the right to appeal. This committee will give a decision within 30 days. It should be noted here that there is no shortage of dutiful, hardworking and honest employees in the government departments, but it is not possible to deny the fact that there are work thieves and corrupt elements in the same ranks. However, it is necessary to distinguish between these two classes in the process of right-sizing. Lest corrupt elements get a chance to play openly again.