ISLAMABAD: During a meeting of the Senate Standing Committee on Cabinet Division, chaired by Rana Mahmoodul Hasan, NEPRA Chairman Waseem Mukhtar discussed potential solutions to the ongoing issue of high electricity bills.
He emphasized that maintaining macroeconomic stability is essential to preventing further increases in electricity rates. “If the macroeconomy remains stable, electricity rates will not rise,” Mukhtar stated.
He also pointed out that without investor confidence and economic stability, controlling the rising cost of electricity would be challenging.
Committee members expressed their frustration over the escalating electricity prices, noting that the public is feeling the strain. “Due to the increase in electricity prices, people are holding us by the neck,” they remarked, adding that “Independent Power Producers (IPPs) linked to 40 families are significantly burdening the public. These IPPs are costing the public dearly.”
The members identified the IPPs as a major source of public anxiety, criticizing the current contractual agreements and calling for a forensic audit of these contracts.
The committee also questioned the decision to allow a coal plant in Sahiwal, citing the logistical challenges of transporting coal by train from the port. They stressed the need for a comprehensive solution to escape the “trap” of IPPs, urging a thorough review and potential renegotiation of IPP tariffs.
The members called for a forensic audit of IPP contracts to ensure transparency and fairness, alongside the development of a strategic plan to mitigate the high costs associated with IPPs and explore alternative energy sources.
The meeting highlighted the urgency of stabilizing the economy and fostering investor confidence to manage electricity rates effectively.
NEPRA Chairman Waseem Mukhtar shared that during a World Bank (WB) meeting, NEPRA was commended for its role as a regulator, with the WB noting that the agency’s objections demonstrated it was functioning properly.
The committee questioned NEPRA’s priorities, asking, “Should NEPRA protect consumers or the interests of 40 families?” Mukhtar responded by explaining the challenges faced, noting that “People are paying Rs80 per unit for electricity. The capacity installed in the country was based on an industrial growth projection of 6 percent.”
He further explained that due to past power shortages, contracts with IPPs were made in dollars, leading to losses as the dollar rate increased. “Investors seek protection, and the rise in the dollar rate has impacted them,” Mukhtar said.
He also noted that NEPRA has eliminated a cross-subsidy of 150 billion from the industry, which previously contributed 220 billion to domestic consumers. He announced plans to open the wholesale market in October, stating that “When the wholesale market is opened, large consumers will leave.”
Mukhtar acknowledged that ongoing consultations are addressing how to manage the system’s burden if the wholesale market is opened. He warned that if the industry exits, domestic consumers may face higher tariffs or increased subsidies.
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