Pakistan Has Paid PKR 7.275 Trillion in Capacity Payments to IPPs, Senate Committee Told

By Rashid Habib

Pakistan has so far paid PKR 7.275 trillion to Independent Power Producers (IPPs) in the form of capacity payments, according to details shared during a recent meeting of the Senate Standing Committee. Officials informed lawmakers that this amount is separate from the nearly PKR 600 billion collected from consumers through electricity bills for power supplied.

Capacity payments refer to payments made to power producers for maintaining electricity generation capacity, regardless of whether electricity is actually produced or supplied to the national grid. The committee was informed by the National Electric Power Regulatory Authority (NEPRA) that these contractual obligations have placed a significant financial burden on the country.

Committee members were also told that several IPPs had been granted tax holidays, meaning the government receives no tax revenue from a substantial portion of their earnings. Lawmakers expressed concern that the agreements have left the government with limited room to renegotiate financial commitments, effectively making it dependent on the existing contracts.

The committee also reviewed allegations regarding salary increases within NEPRA. Members were surprised to learn that the NEPRA chairman's monthly salary had reportedly been increased from PKR 1.1 million to PKR 3.5 million without approval from the federal cabinet. The committee termed the increase unnecessary and unlawful and recommended appropriate action against those responsible.

Separately, the Senate Standing Committee voiced serious concern over the rising cost of electricity for consumers. Senator Kamil Ali Agha described the heavy burden of electricity bills as a form of injustice against the public. He criticized the collection of around PKR 600 billion through electricity bills and argued that increasing taxes and surcharges have pushed the effective per-unit electricity cost to nearly PKR 80, placing severe financial pressure on households and businesses.

Lawmakers emphasized the need for urgent reforms in the power sector, greater transparency in IPP agreements, and measures to reduce electricity costs for consumers amid the country's ongoing