In Karachi, there is a growing concern about the issue of electricity bills, and if not resolved wisely, it could lead to social unrest.
Both the PPP and PML-N political parties are held responsible for generating costly electricity through the installation of expensive Independent Power Producers (IPPs). However, both parties seem to be protesting more for their personal interests. These factors have contributed significantly to the escalating debt in the energy sector, which has now reached a staggering 2.5 trillion rupees.
The decision to make payments in US dollars, while attracting international companies, has also posed economic challenges for Pakistan. This was compounded by the requirement to maintain a 17 percent return on equity.
During the Musharraf era, the absence of consensus on the Kalabagh Dam led to the establishment of packer plants, and the contracts with IPPs lacked transparency. These contracts were kept confidential to facilitate commissions and kickbacks for those involved, and the terms were not made public. Instead of an open auction, contracts were discreetly awarded to favored individuals.
Considering that many IPPs were granted long-term contracts spanning 20 to 30 years, the government should have opted for shorter-term contract arrangements.
