Govt paid Rs 82bn in last 6 yrs to IPPs, PAC told

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ISLAMABAD: The Public Accounts Committee (PAC) on Wednesday was informed the government has paid Rs 82 billion as interest to Independent Power Producers (IPPs) from 2006 to till date due to delay payment for the power purchased from them.

Water and Power Development Authority (WAPDA) and IPPs has made an agreement the government would pay all amount of power generated by IPPs with 25 days and beyond this time the government has to pay some interest/penalty to IPPs.

Audit officials informed the Committee the agreement made between WAPDA and IPPs was in favour of the IPPs and was providing billion of losses to the national exchequer and termed it a systemic issue. Special Secretary Ministry of Water and Power Himayatullah informed the Committee it all happened due to wrong energy mix.

Today the government is depending on power generation 70 percent on thermal and 30 percent on hydel and suggested for improving the energy mix.

He claimed recoveries of all power distribution companies were very low and the government was unable to clear the dues of IPPs within stipulated period of time (25 days). This problem creates circular debt issue, which is main cause of power shortage in the country, he maintained.

PAC member Syed Zafar was of the view circular debt was created deliberately to discourage cheaper power generation (hydel) in the country. It is astonish the government purchase Rs 18/unit power and sold the same unit for Rs 9/unit to another company. Some commission mafia is involved in circular debt issue.

The PAC directed the Ministry to take this audit para back to DAC and discuss it in detail. Chairman PAC Nadeem Afzal Gondal was of the view the Committee cannot settle this issue and present the same audit para after proper discussion in DAC meeting.

End.