Pakistani Power Sector Faces Financial Strain: IPPs and Employee Benefits Highlighted

Islamabad: In a recent Senate committee meeting, significant issues within Pakistan’s power sector were brought to light. Secretary of Power revealed that employees of power distribution companies (DISCOs) receive monthly free electricity amounting to 1.3 billion rupees. On average, each employee benefits from 78,000 rupees worth of free electricity each month.
The Senate Standing Committee on Energy, chaired by Mohsin Aziz, was informed that a proposal to replace these free units with monetary compensation was approved by Energy Minister Owais Laghari. However, a court injunction currently prevents the implementation of this change.
Owais Laghari also mentioned that a thorough review of Independent Power Producers (IPPs) contracts is underway as per the Prime Minister’s instructions. There is now an opportunity for a full audit of these IPPs. Despite operational inefficiencies, IPPs receive annual payments throughout the year. Specifically, 1,845 megawatts of IPPs operate for only 85 hours annually but receive 49 billion rupees in payments each year. Even if a plant remains inactive for the entire year, it still receives capacity payments, as the cost of operating these plants is deemed prohibitive.
Additionally, Secretary of Power highlighted that the high cost of electricity is prompting consumers to seek alternative energy sources. This year, 6,000 megawatts of solar panels have been imported, with many opting for off-grid solutions.