THIS is with reference to the letter ‘Capacity charges’ (June 3), which used incorrect information to justify the act of paying high capacity charges. First, hydro-power plants have a life of 25 years, while thermal power plants have a shorter life. The government had entered into contracts with thermal power plants in the 1990s as a stop-gap measure to cover power generation until hydel dams were constructed. However, the contracts of these power plants have been extended multiple times even when the hydel dams have become operational.

The government recently reported the maximum electricity usage of around 24,000MW in Pakistan during the heatwave. In contrast, the National Electric Power Regulatory Authority (Nepra) has reported an installed capacity of 45,000MW, which has been frequently quoted in the media, like the ‘Developing a competent energy market’ (B&F, May 20).

That being so, 21,000MW of power is not utilised even on the hottest of days.

A Senate review last year had reported that capacity payments made up 71 per cent of all payments to independent power producers (IPPs).

And, after all the due calculations, the government is believed to be paying an astounding amount of Rs80 billion per month as capacity charges.

Besides, it has also been reported recently that the electricity circular debt has increased to Rs135 billion per month. By removing the capacity charges over unused, unproduced electricity, the government can surely reduce the circular debt by as much as 60pc. As such, by doing away with the capacity charges, circular debt can, indeed, be controlled. This is as simple as that.

Shahryar Khan Baseer
Islamabad

Published in Dawn, June 16th, 2024

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