Islamabad: Energy sector experts are calling on the Pakistani government to reassess its agreements with Independent Power Producers (IPPs) following startling revelations about the sector’s inefficiencies and financial burdens. Reports indicate that several IPPs have received substantial sums from the state without corresponding electricity production, due to what are described as flawed contracts.

According to Ministry of Information and Broadcasting, comparisons with similar projects in Bangladesh and Vietnam reveal that wind plants in Pakistan were installed at quadruple the cost, suggesting significant over-invoicing. Moreover, despite Pakistan’s coal reserves, IPPs predominantly use costly imported fuels such as high-speed diesel and imported coal, which contribute to the higher price of electricity generated.

The sources also highlighted discrepancies in fuel use and electricity generation by the IPPs, noting that the power produced did not correspond to the volume of imported fuel, yet these companies still received billions in government subsidies. Additionally, while substantial funds were allocated for plant maintenance, only a fraction was reportedly spent on actual upkeep.

Further complicating matters, the government has also absorbed the insurance costs for IPPs, facilitated tax duty exemptions, and initially bore the setup costs for these private entities. Despite these contributions, the Pakistani government will not retain ownership of the plants once the contract terms expire, many of which were registered under foreign names despite local ownership, pointing to possible contract manipulation.

Experts argue that these costly arrangements hinder the government’s ability to invest in other critical sectors and are calling for urgent reviews of the agreements. Some IPPs have shown a willingness to renegotiate terms and reduce prices, which could offer a pathway to more sustainable energy costs for Pakistan.

These revelations underscore the need for greater transparency and reform in Pakistan’s energy agreements to ensure more equitable and efficient power production that aligns with the nation’s economic interests.