Business leader and former President of the Islamabad Chamber of Commerce and Industry (ICCI), Dr. Shahid Rasheed Butt, on Friday, lauded the government for deciding to suspend the supply of gas to captive power plants (CPPs) by January 2025. He said the government’s decision is commendable because these obsolete power plants are not only disturbing the allocation of energy on merit but also wasting gas worth billions of rupees.
He added that the government should have made this decision decades ago, but the powerful owners of CPPs prevented it from acting on merit.
Shahid Rasheed Butt said in a statement issued here today that the supply of gas to these power plants should be immediately cut off to save billions of rupees annually.
CPPS were allowed at a time when there was a mismatch between demand and supply of electricity, but despite the installation of new power plants and the surplus production of electricity, these inefficient plants were allowed to operate, which amounted to playing with the country’s scarce resources.
Shahid Rashid Butt said that the closure of these power plants will reduce gas companies’ losses and cut IPP capacity charges, which will benefit the public and business community. He observed that shutting down the captive power plants while installing new ones could have saved billions of dollars and resulted in cheaper electricity.
The business leader claimed that influential captive power plant owners have always received natural gas on political grounds, regardless of merit.
In the past, attempts were also made to convince the owners of captive power plants to use grid electricity, but due to their influence, the government-backed off. However, due to the IMF’s insistence, it now seems impossible to do so. It is worth mentioning here that inefficient captive power plants have been absorbing a significant portion of subsidies, contributing to the growing subsidy burden in the power sector.
Experts in the power sector have repeatedly pointed out that these CPPs are supplied with cheaper indigenous gas. At the same time, they continue to use more expensive Liquefied Natural Gas and other fuels, leading to higher subsidies.
He said that at present, the country’s economy couldn’t bear the burden of 1211 captive power plants, many of which take cheap gas from the government and sell it to the government at several hundred percent profit. Energy costs are currently going through the roof. The rising cost of energy is causing problems for both households and companies. Changes in base tariffs and increased costs are to blame for the current rise. The cost of importing fuel further strains the foreign account. Now, it is crucial to optimise utilising existing energy resources within the country, he observed.
Now, the government cannot continue the status quo. A strict policy of using the energy resource for the most efficient purposes must be established. Therefore, he asserted that the correct decision to shut down CPPS should not be reversed.
