IPPs Face Senate Scrutiny Over Costly Payments and Contract Extensions
Nadeem Tanoli
Islamabad: The Senate Standing Committee on Cabinet Secretariat has called for a comprehensive investigation into Independent Power Producers after raising serious concerns over alleged over invoicing, expensive capacity payments, extensions granted beyond agreed contractual timelines and the absence of an effective regulatory mechanism to verify actual generation capacity. The committee’s scrutiny has once again placed Pakistan’s costly power sector agreements at the center of public accountability as consumers continue to face rising electricity bills.During a detailed briefing by the National Electric Power Regulatory Authority, the committee reviewed tariff determination, capacity payments, energy payments to IPPs and extensions granted to power producers after the expiry of their contractual terms. Members expressed serious concern over the financial impact of these arrangements and questioned whether the existing regulatory oversight is strong enough to protect public interest.The committee noted the alleged over invoicing by IPPs and questioned how payments are verified before being passed on to consumers through electricity tariffs. The discussion highlighted concerns that weak verification mechanisms may burden the power sector and increase electricity costs for ordinary citizens.Senator Saleem Mandviwalla, who chaired the meeting, emphasized the need for a comprehensive investigation into all IPPs. He directed NEPRA to submit a detailed comparative report covering capacity payments, energy payments and extensions granted to independent power producers.The issue of capacity payments remained a key focus of the discussion. These payments are made to power producers for available generation capacity, even when electricity is not fully purchased or consumed. The committee’s concern reflected wider public frustration over high electricity tariffs and the growing financial pressure created by long term power contracts.The committee also questioned extensions granted to IPPs beyond the expiry of their contractual terms. Members sought clarity on the basis for such extensions, the financial implications for consumers and whether these decisions were backed by proper regulatory evaluation.Another major concern was the absence of an effective system for periodic verification of actual generation capacity by the regulator. The committee observed that without a strong verification mechanism, there can be serious questions over the accuracy of payments, tariff calculations and the overall accountability of power producers. NEPRA has now been directed to provide a detailed report comparing capacity payments, energy payments and contract extensions. The report is expected to help the committee assess whether IPP payments and regulatory decisions are justified, transparent and in line with public interest.The discussion comes amid growing concern over Pakistan’s electricity costs, circular debt and the financial structure of power-sector contracts. The committee’s direction signals that IPPs may face closer parliamentary scrutiny over payments, extensions and alleged billing irregularities.
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