Govt orders probe into costly off-grid power purchases by Discos
ISLAMABAD: Amid public outcry over high electricity tariffs and prolonged loadshedding, the government on Wednesday said it had uncovered instances of distribution companies (Discos) purchasing expensive power outside the national grid in violation of the economic merit order.
According to an official statement, the Discos were purchasing electricity from small power producers (SPPs) and captive power plants (CPPs) through bilateral contracts at rates higher than the national tariff, thereby bypassing the national grid and the Independent System and Market Operator (ISMO).
It added that the names of the Discos and the quantum of power purchasing were not disclosed to allow an independent inquiry to take its course.
The statement said that Power Minister Awais Leghari took notice of the practice and ordered an independent probe. “The matter was revealed during the stock-taking of Discos and ISMO,” it said.
According to the statement, the power minister directed that the practice be discontinued immediately and brought in line with the provisions of the National Electric Power Regulatory Authority’s (Nepra) grid code, distribution code and relevant directives.
Distribution companies were buying electricity from small producers and captive power plants thru bilateral contracts at rates higher than the national tariff
Mr Leghari also directed the authorities to coordinate with ISMO to integrate SPPs and CPPs into the system in a manner that ensures the least-cost generation of electricity, in line with the economic merit order.
“In compliance with the power minister’s directions, the Power Division has issued instructions to all Discos to ensure that no off-merit procurement from SPPs shall be undertaken under any circumstances without obtaining prior explicit approval from ISMO,” the statement said.
The off-take of electricity from SPPs shall be strictly limited to cases where such power falls within the prevailing national merit order, determined based on incremental cost of generation by following the prescribed mechanism, the Power Division said.
Published in Dawn, April 23rd, 2026