How 40 Families Exploited the Nation Through IPP Deals, Costing Billions

Islamabad: The government’s cancellation and revision of Independent Power Producers (IPP) agreements has saved the country billions of rupees. According to reports from the Ministry of Energy, over PKR 3,600 billion has been saved as a result of scrapping or revising these costly contracts.

Nearly 20 years ago, expensive electricity agreements were signed with 40 IPPs. Under these contracts, the companies received “capacity charges” worth billions even when they did not generate electricity. These contracts were costing the public roughly PKR 360 billion annually.

Industry experts have criticized that a few wealthy families effectively held the country hostage through these IPP deals, pocketing enormous profits while the nation and its citizens bore the burden. They have demanded action against individuals who were paid billions despite power plants remaining idle.

These agreements guaranteed “capacity payments,” meaning the government had to pay the companies according to their installed capacity, regardless of actual electricity generation. Most payments were denominated in U.S. dollars, causing the government to pay significantly higher amounts when the rupee depreciated. This inflated electricity costs for ordinary consumers, businesses, and industries.

Auditor General reports and investigative commissions highlighted excessive profits, alleged corruption, and a lack of transparency in many of these projects. Production costs were often exaggerated, allowing companies to earn several times their actual investment.

The cancellation and revision of these IPP agreements have not only relieved the national treasury but also marked a critical step toward addressing long-standing inefficiencies and financial exploitation in Pakistan’s energy sector.