Islamabad: As the government intensifies efforts to re-evaluate agreements with independent power producers amid rising electricity tariffs, Special Assistant to the Prime Minister on Energy Mohamed Ali accused energy companies of obstructing regulatory audits.
Speaking on a talk show, Ali criticized independent power producers for resisting attempts by regulators to review their operations. He stressed that “no heat rate audit has been conducted for independent power projects in this country,” referring to audits that evaluate the fuel efficiency of power plants.
The discussion included prominent figures, including former Special Assistant for the China-Pakistan Economic Corridor (CPEC) Khalid Mansoor, economist Ammar Habib Khan, and Lucky Electric Power CEO Raheel Muhammad. They deliberated on controversial issues such as capacity payment fees and the uncontrolled profitability of independent power manufacturers, which contributed to energy bills that the public could not afford.
Ali stressed that in 2012, the Securities and Exchange Commission of Pakistan (SECP) sought to audit independent energy companies over excessive profits, but faced resistance, with the companies obtaining a stay order from the courts. Likewise, he noted that independent power producers have prevented the National Electric Power Regulatory Authority (NEPRA) from conducting a heat rate audit.
“If everything is clear, why do we resist audits?” Ali asked, adding that such actions undermine the regulatory function. He stressed the need for fairness in energy sector agreements to achieve a balance between the interests between the government, consumers and independent energy producers.
Khaled Mansour, former CEO of Hubco, rejected the idea that independent power producers are resisting audits. He claimed that during his tenure as Chairman of the China-Pakistan Economic Corridor, an agreement was reached to conduct heat audits, but the government failed to follow up. Mansour explained: “We agreed on the terms of reference and communicated with the experts, but the process stopped.”
Mansour also criticized the government for maintaining the single buyer system, calling for competitive market reforms instead. He urged “opening up the sector, rationalizing transportation fees, and facilitating the competitive environment.”
Much of the discussion centered on the burden of capacity payments – the fixed fees paid to independent energy providers regardless of energy use. Gohar Ijaz, a businessman and former federal minister, condemned the government’s policy of recovering energy losses from consumers instead of eliminating subsidies.
“The government pays Rs2,000 billion annually to power producers as power fees,” Ejaz claimed, adding that some non-operational IPPs receive Rs32 billion each. He accused officials of inflating project costs and criticized coal-fired power plants for their inefficiency, generating less than 10% of the required electricity.
Ijaz called for immediate reforms to address systemic deficiencies and claimed that mismanagement of energy payments was a “criminal act” against the public.
The discussion stressed the urgent need for policy reforms in the energy sector, with participants calling for greater transparency, regulatory oversight and competitive market practices to ease the financial burden on consumers and stabilize the energy economy.