ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has moved the Supreme Court of Pakistan for a forensic audit of independent power producers (IPPs), amid a worsening cost-of-living crisis in the South Asian country.
The development comes amid protests in Rawalpindi and Karachi by thousands of supporters of the Jamaat-e-Islami (JI) religio-political party, who have been calling for a review of Pakistan’s loss-making agreements with IPPs, reduction in power tariffs, revocation of additional taxes introduced in the last budget and other similar measures.
Pakistan has the highest electricity tariffs in the region and the government is currently on track to pay Rs2.1 trillion to the IPPs in capacity payments this fiscal year, while circular debt for the energy sector in 2024 reached Rs. 5.422 trillion. At the same time, numerous IPPs are being paid billions despite not producing any electricity.
All IPP contracts for the sale of electricity are structured in two tiers. First, the power purchaser is required to make “capacity payments,” which are required to cover all fixed costs of the IPPs, including debt repayments as well as Operations and Management costs (O&M Costs) and return on equity (RoE) at a stipulated rate, according to the FPCCI.
These capacity payments are to be made by the power purchaser whether or not any electricity is actually purchased. In addition to capacity payments, there is a variable cost attributable to the production of energy above a certain plant capacity factor (normally 60 percent). In other words, if more than 60 percent of a plant’s capacity is utilized for electricity generation, then the relevant IPP is entitled to additional payments. Fuel cost is treated as a pass-through item.
“In the light of the foregoing, it is respectfully prayed that this Honourable Court may be graciously pleased to direct the Government of Pakistan to commission a detailed and thorough forensic audit of all IPPs,” the FPCCI prayed in its petition, urging for the recovery of excess profits earned by IPPs, renegotiating all IPP agreements, and removing anomalies regarding the calculation of Internal Rate of Returns (IRR) on equity investments in all IPP agreements.
The FPCCI referred to a 288-page report by Committee for Power Sector Audit, Circular Debt Resolution and Future Roadmap from 2020, which it said identified more than Rs100 billion worth of excess payments made to IPPs and recommended a number of steps to identify power sector problems, including conducting a forensic audit and the recovery of prior excess payments.
“Till date, no such audit has been conducted nor have any prior excess payments been recovered. More importantly, there is no public explanation for why the 2020 Report remains unimplemented,” it noted. “Pakistan’s power sector is a thus a paradigmatic example of regulatory capture, where year after year the people of Pakistan continue to suffer at the hands of predatory elites.”
The FPCCI said the current situation was not only placing an “unbearable burden” on domestic consumers, but it was also forcing industries to either go off-grid or shut down, while the government was trying to recover higher and higher tariffs from a smaller and smaller pool of customers.
One of the main reasons for Pakistan’s perennial economic crisis is its electricity sector. Pakistan is on track this year to pay approximately Rs3.58 trillion in payments to electricity generating companies. Out of this total amount, approximately Rs2.63 trillion is likely to be recovered, while the remainder will be subsidised by the government. This unrecovered amount will be added to already existing circular debt of Rs5.422 trillion, according to the petition.
Currently, Pakistan has installed generation capacity of 45,885MW. Out of this, 23,860MW (52 percent) has been installed by state-owned entities (both federal and provincial), while the remaining capacity of 22,043MW (48 percent) has been installed by IPPs. It is important to note that as against its installed generation capacity of 45,885MW, the maximum power demand during the summers is around 30,000MW while winter peak loads are closer to 12,000MW.
Notwithstanding this current oversupply of electricity, IPPs are scheduled to add another 7,460MW of electricity by 2032. This capacity is in addition to the 11,550MW due to be added through the government’s own projects (4,320MW Dasu Hydroelectric Project due for completion in 2026, 4,500MW Diamer-Basha Hydroelectric Project due in 2029, 1,530MW Tarbela 5 extension due in 2026, and 1,200 MW Chashma 5 nuclear plant due for completion in 2031.
“It is estimated that during the current financial year (i.e. 2024 – 2025), capacity payments will total Rs2.1 trillion (equal to about 1.9 percent of GDP). In FY 2023-24, 45 percent of capacity payments were made to the government-owned plants, 15 percent to private parties (mostly local) and 40 percent to IPPs set up under CPEC (China-Pakistan Economic Corridor),” the FPCCI said.
“Notwithstanding the trillions being paid as capacity charges to the IPPs, actual capacity utilization of the IPPs is very low. In some cases, IPPs are getting paid billions in capacity charges without generating a single unit.”
It said it was also important to note the exponential manner in which such charges had increased.
“In 2015, an average of 13,000MW electricity was being consumed with capacity charges of Rs200 bn (against an installed capacity of about 20,000 MW). Today, consumption still averages around 13,000MW but capacity charges have increased by more than 1000 percent to Rs2.1 tr (against an installed capacity of about 45,885 MW),” the FPCCI added.
Pakistani industrialists move top court for forensic audit of independent power producers
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Pakistani industrialists move top court for forensic audit of independent power producers
- The development comes amid protests in Rawalpindi, Karachi for reduction in power tariffs and review of Pakistan’s loss-making agreements with IPPs
- Pakistan has highest tariffs in the region and the government is currently on track to pay Rs2.1 trillion to IPPs in capacity payments this fiscal year
Government in a fix as Pakistan top court orders immediate implementation of reserved seats verdict
- Supreme Court ruled in July the PTI was eligible for reserved seats in national and provincial assemblies
- Judgment was viewed as a setback for PM Sharif’s ruling coalition and was not implemented by the ECP
ISLAMABAD: The Supreme Court of Pakistan on Saturday censured the election regulatory authority for its “dilatory tactics” to avoid the implementation of a judgment on reserved seats for women and minorities in the national and provincial legislatures that favored the opposition Pakistan Tehreek-e-Insaf (PTI) party, warning of potential consequences.
The court has addressed the issue through a short order at a time when Prime Minister Shehbaz Sharif’s coalition government is planning to get a constitutional amendment passed from parliament to allegedly give an extended term to the country’s top judge. The amendment requires two-third majority in both houses of parliament, though the coalition can lose a portion of its existing number of seats after the apex court ruling.
In a verdict on July 12, a 13-member bench of the court declared the PTI of Pakistan’s jailed former Prime Minister Imran Khan eligible for the reserved seats after the Election Commission of Pakistan (ECP) forced the party’s candidates to contest the February 8 polls as independents.
The ECP took the decision after the PTI lost its election symbol in the wake of a prolonged legal battle for not holding proper intra-party polls. Subsequently, the election body refused the reserved seats to the PTI on technical grounds, saying they were only meant for political parties instead of independent candidates.
The Supreme Court overturned the ECP decision, saying it had misconstrued an earlier verdict related to the election symbol by depriving the PTI of the reserved seats. Instead of giving the seats to the party, however, the election body filed a petition, seeking guidance on the matter and questioning the validity of the party’s organizational structure under the circumstances.
“The clarification sought by the Commission [ECP] … is nothing more than a contrived device and the adoption of dilatory tactics, adopted to delay, defeat and obstruct implementation of the decision of the court,” read the court’s four-page order.
“The attempt by the Commission to confuse and cloud what is otherwise absolutely clear as a matter of the Constitution and the law must therefore be strongly deprecated,” it added.
The government and its allies are currently struggling to complete the required two-third majority for the constitutional amendment allegedly to revisit the length of the top judge’s tenure.
As per the official tally, it is short of at least 13 lawmakers in the National Assembly and nine in the Senate to gain the required number.
In recent days, the top government leaders have tried to complete the numerical strength by wooing opposition parties like the Jamiat Ulema-e-Islam of Maulana Fazlur Rehman and some PTI lawmakers who are yet to be declared members of the party due to the delayed implementation by the ECP of the Supreme Court judgment.
The four-page Supreme Court order may serve as a setback to these efforts since it recognizes the PTI-backed independent candidates “members of the parliamentary party of PTI in the National Assembly and Provincial Assemblies concerned, for all constitutional and legal purposes.”
“The continued failure of, and refusal by, the [ECP] to perform this legally binding obligation [of implementing the July verdict] may, as noted, have consequences,” the order said.
“This obligation must be discharged forthwith,” it added.
Speaking to Arab News, Abdul Moiz Jaferii, a legal expert, described the order without ambiguity.
“This is a clear order from the Supreme Court that all returned independent candidates of the PTI are deemed to be PTI lawmakers,” he said.
“The election commission is now left with no choice but to notify all independent returned candidates as lawmakers of the PTI forthwith,” he added. “The top court has censured the ECP for delaying the implementation, but now one can hope that this issue will come to a logical conclusion within days with allocation of the reserved seats to the PTI.”
Saudi Arabia offers 15% investment in Pakistan’s Reko Diq mining venture
- Reko Diq in Pakistan’s southwest is considered one of the world’s largest undeveloped copper and gold resources
- State-owned media says Pakistan expects up to $5 billion of Saudi investment in mining, agriculture by June 2025
ISLAMABAD: Saudi Arabia has offered a 15 percent investment in the Reko Diq copper and gold mine project in Pakistan’s southwestern Balochistan province, according to Pakistani state-owned media on Saturday.
Reko Diq is considered one of the world’s largest undeveloped copper and gold resources, primarily operated by Canada’s Barrick Gold, which holds a 50 percent stake in it.
The remaining stake is owned by three federal state-owned enterprises and the Balochistan provincial government, though Pakistan has also invited Saudi Arabia to invest in the project.
“Saudi Arabia has offered fifteen percent investment in Reko Diq Mining project,” the Radio Pakistan said in one of its reports. “The Kingdom has also offered grants to build road infrastructure around the Reko Diq project.”
“Special Investment Facilitation Council (SIFC) has approved the structure of the offer but the final decision has been left to the Cabinet Committee on Intergovernmental Transactions,” it added.
Pakistan set up the SIFC, a civil-military hybrid body, last year in June with the sole purpose of reviving the frail national economy, dented by low foreign exchange reserves, currency depreciation and record inflation.
Barrick Gold’s top official, Mark Bristow, has also acknowledged the Saudi interest in the project, saying his company would not dilute its equity.
However, he added that Barrick Gold would not oppose any decision by the Pakistan government to sell part of its stake to Saudia Arabia.
Radio Pakistan said the government in Islamabad expects up to $5 billion investment in the mining and agriculture sector by June next year.
Pakistan calls US sanctions on firms allegedly aiding missile program ‘politically motivated’
- US sanctioned a Chinese institute, other companies this week after accusing them of helping Pakistan
- China says it opposes such unilateral sanctions, vows to protect interests of its citizens and companies
ISLAMABAD: Pakistan on Saturday criticized the recent decision by the United States to impose sanctions on commercial entities accused of aiding Pakistan’s ballistic missile program, calling it “biased and politically motivated.”
The US imposed the sanctions on a Chinese research institute and several companies on Thursday, alleging they had supplied missile-applicable items to Pakistan.
State Department Spokesperson Matthew Miller said in a statement the Beijing Research Institute of Automation for Machine Building Industry had collaborated with Pakistan to procure equipment for testing rocket motors for the Shaheen-3 and Ababeel systems, and potentially for larger systems.
He maintained that the US decision reflected its commitment to “act against proliferation and associated procurement activities of concern, wherever they occur.”
“Pakistan considers this action as biased and politically-motivated,” Foreign Office Spokesperson Mumtaz Zahra Baloch said in response to media queries related to the development. “Similar listings of commercial entities in the past were based on mere suspicion [and] involved items not listed under any export control regime and yet were considered sensitive under broad, catch-all provisions.”
The administration in Washington had also targeted three China-based companies with sanctions last year in October on similar grounds.
“It is widely known that some countries, while claiming strict adherence to nonproliferation norms, have conveniently waived licensing requirements for advanced military technologies to their favored states,” Baloch continued.
“Such double standards and discriminatory practices undermine the credibility of global nonproliferation regimes, increase military asymmetries, and endanger international peace and security,” she added.
China has already said it will “firmly protect” the rights and interests of Chinese companies and individuals.
One of its diplomats in Washington said this week his country “opposes unilateral sanctions and long-arm jurisdiction that have no basis in international law or authorization of the UN Security Council.”
With input from Reuters
Pakistan fall 2-1 to India in final pool match at Asian Hockey Champions Trophy
- The Green Shirts had already qualified for the semifinal of the tournament in China before facing India
- Pakistan were unbeaten until today, winning 5-1 against China to secure second spot on the points table
ISLAMABAD: Pakistan’s national hockey team suffered a 2-1 defeat in the last pool match against India on Saturday at the Asian Hockey Champions Trophy 2024 at the Moqi Hockey Training Base in Hulunbuir, China.
The two traditional rivals played with determination, with Pakistan securing an early advantage when Ahmad Nadeem netted a field goal, putting India under pressure.
However, the momentum shifted when the rival team responded with two consecutive goals in the first half, securing a lead they maintained until the final whistle.
“What a game,” Hockey India proclaimed on social media platform X. “India vs Pakistan lived up to the hype with non-stop action and intense rivalry!”
The Asian Hockey Federation also confirmed the 2-1 score in India’s favor toward the end of the match.
The Pakistan team had already secured a spot in the semifinals before facing India.
The Green Shirts remained unbeaten until today’s match, having secured a 5-1 victory against hosts China on Thursday, which moved them to second place on the points table.
“It is a collective team effort, we are learning by each match,” Hannan Shahid, who was named “hero” of Thursday’s match, said after the win.
Shahid said his side conceded too many cards in the start of the tournament, but had overcome it.
“Hero of the team award is a result of my team’s effort, they created chances for me to score and I am happy how we have progressed in the tournament,” he added.
Others who scored goals for Pakistan included Rehman Abdul and Ahmad Nadeem, while Jiesheng Gao scored the only goal for China.
Trump paid no ‘heed’ to Imran Khan’s imprisonment, Pakistani-American aide says
- Trump aide Sajid Tarar says some Pakistani-Americans conveying through social media that Trump could push for Khan’s release if elected, but there is ‘no truth to it’
- Khan and his PTI party have waged an unprecedented campaign of defiance against Pakistan’s military and now the PTI is aiming to mobilize public for Khan’s release
ISLAMABAD: Sajid Tarar, a Pakistani-American businessman and close aide to Donald Trump, said on Friday that a few Pakistani-Americans had tried to discuss former prime minister Imran Khan’s imprisonment and local Pakistani politics with the US presidential nominee at a recent fundraiser, but Trump “did not pay any heed to it.”
Khan, who is in jail since last August, was ousted from the PM’s office in 2022 in a parliamentary vote of no confidence after what is widely believed to be a falling out with Pakistan’s powerful military, which denies being involved in politics.
Since his removal, Khan and his party have waged an unprecedented campaign of defiance against the military and now his Pakistan Tehreek-e-Insaf (PTI) party is aiming to mobilize the public through rallies for its leader’s release from jail in “politically motivated” cases.
Tarar, who lives in Maryland and met Trump through his lawyer in 2016, is one of 136 members of Trump’s finance team and is believed to be instrumental in raising funds and organizing election campaigns for the former president across the US.
In an interview with Arab News, the Trump aide said some Pakistani-Americans had been conveying through social media that the US presidential nominee could push for Khan’s release if he was elected, but there was “no truth to it.”
“Even if Trump wins, obviously, he won’t be interfering in Pakistan’s judicial system to get Imran Khan released,” Tarar, who moved to the US from Pakistan’s Mandi Bahauddin district to study law some 36 years ago, told Arab News over the phone.
“Some Pakistani-Americans have been pedaling this thing on social media, but there is no truth to it that President Trump would interfere in local Pakistani politics.”
Tarar stressed that Trump had a relationship with the prime minister of Pakistan during his tenure in the office and not with an individual, referring to Khan’s meeting with Trump in the White House in July 2019.
“Representatives of different political parties in Pakistan, including the PTI, have approached me to lobby and meet Trump, but this has not materialized yet,” he added.
Trump is facing Democratic nominee and US Vice President Kamala Harris in the presidential election due to be held on November 5, with both candidates struggling to get maximum support of all communities, including Pakistani and Muslim diaspora, in the upcoming elections.
Tarar claimed that a majority of Muslim population in the US supported the Republican nominee in the upcoming presidential election, following the failure of President Joe Biden’s administration to have a ceasefire in Gaza.
“The majority of Muslim voters, including the Pakistani diaspora in the US, has been aligning with Trump after the Biden administration’s failure to manage a ceasefire in Gaza,” he said.
Muslims in America have been visibly divided between Republican and Democratic camps ahead of the presidential election in November. Historically, majority of American Muslims have voted for the Democrats, but this time they appear to be leaning toward Republican nominee Trump.
The US presidential election campaign is currently at its peak and both candidates are struggling to woo voters, promising different reforms and policies, according to Tarar. Some 17 percent Muslims voted for Trump in the previous election, but this is going to be more than 50 precent in this election.
The Pakistani-American aide is currently in California for Trump’s fundraising and has been mobilizing Muslim communities, including 0.7 million Pakistanis, in the US. He believes Pakistan-US diplomatic and defense relations would improve under the Trump administration, which will bring peace and stability to the region and the world.
“Pakistan being next to China and Afghanistan cannot be ignored at all [by the US] as the Trump administration will be fully focusing on terrorism eradication and stability in the region,” the aide said.
