THE per-unit cost of electricity has exceeded Rs70, making consumers worried and rather anxious about their exorbitant monthly electricity bills. Those in the know of things believe independent power producers (IPPs) happen to be the only ones having fun at the cost of poor consumers. Some even draw an analogy of these plants with the East India Company.

Currently, the national power-generation capacity stands at about 43,000MW. The energy mix comprises 28,811MW of electricity generated from thermal sources, 10,635MW from water sources, 1,838MW by wind turbines, 822MW from solar panels, and 360MW from nuclear sources.

Half of this electricity is produced by the 42 IPPs that are active in the field, and with the protection cover in the shape of capacity charges, they are surely making hay as the sun continues to shine on them.

Millions of units are provided free to government employees in Pakistan every year, and electricity theft is common which is an impossibility without the connivance of IPP staff. The K-Electric (KE), which portrays itself as a success story, has received government subsidies worth billions of rupees. Eventually, all these elements together lead to an exorbitant power tariff for the consumers.

In 2023, one Hub-based IPP reduced power-generation to one-sixth of the installed capacity, but continued to receive full payment as per agreements that are backed by sovereign guarantees. Not much different is the case of the other IPPs that have received huge subsidies and tax reliefs worth trillions of rupees till 2024.

Keeping all these facts in view, it is evident that the IPPs have caused a colossal loss to the national economy. Industries have been pulling the shutters down because they are unable to survive the spike in electricity tariff. Domestic and industrial use of electricity has also seen a decline, and the government is facing a severe crisis in continuing to honour the agreements with the IPPs.

The rapid shift to solar energy by domestic, agricultural and even corporate consumers is a direct response to the worsening situation.

There have been some attempts by the government to review its options regarding the IPP stranglehold, and it succeeded in convincing five IPPs to have their initial agreements terminated. But a lot more is to be done. What the country needs — and needs rather urgently — is a focussed, more intensive approach to the issue.

Naira Eshaal
Islamabad

Published in Dawn, January 9th, 2025