THE recent conflict involving the blockade of the Strait of Hormuz has created an acute petroleum crisis and disruptions in LNG supply that was, and is, serious enough for the government in Pakistan to invoke force majeure to settle the matter of capacity payments with independent power producers (IPPs). It is time to muster courage to resolve this IPP cancer that has become the proverbial Achilles’ heel hindering the country’s struggle to achieve financial self-sustenance.

Majority of the IPPs rely on imported thermal fossil fuels and are a burden on the national exchequer, producing power that remains underutilised because of basic issues with distribution. The irony is that those at the helm of affairs were aware that the bulk of electricity produced would not be utilised because of grid issues and a distribution system that lacked capacity to carry it across the length and breadth of the country. Yet, they proceeded. There was an abundance of solar energy available, and it could have been optimised even back then, but that was not done.

Pakistan pays a massive Rs3.4 trillion to the IPPs as contractual charges, with consumption stagnant at 13,000MW against an installed capacity of 43,000MW. While IPPs are reaping a bonanza, the country has been driven to the verge of bankruptcy. Unfortunately, this continued economic paralysis has an adverse impact on national sovereignty and security.

Malik Tariq Ali
Lahore

Published in Dawn, May 27th, 2026