Excess power capacity
Pakistan's power sector is mired in a tragic paradox, with citizens enduring relentless load-shedding and unaffordable bills. The nation pays Rs2.5 to Rs2.8 trillion annually to power plants that don't generate a single unit of electricity. This astronomical sum — equivalent to roughly 3% of GDP — epitomises a system where financial engineering trumps public interest, burdening consumers with costs for "capacity" that remains perpetually idle.
The roots of this scandal lie in flawed power purchase agreements (PPAs) signed with independent power producers (IPPs). These contracts guarantee fixed "capacity payments" regardless of actual electricity generation, transferring all operational and market risks to the public. As Pakistan's installed capacity grew to over 46,000 MW — driven significantly by over 2,800 MW added through net metering — the utilisation of existing plants plummeted. Thermal power, though still dominant at 55.7% of the mix, remains underused in the winter due to transmission constraints and seasonal demand fluctuations — winter demand is about 12,000 MW, compared to summer demand of about 30,000 MW.
Substandard transmission lines have been blamed for the failure to bring several new cost-effective plants online, notably Port Qasim, China Power and Lucky Electric. Instead, the government continues to rely on older, less efficient plants, resulting in a double whammy of unnecessary capacity payments and increased pollution. Capacity payments accounted for about 71% of the power purchase price last year and are projected to rise by one-third this year.
The guaranteed payments are also a sorry example of 'socialism for the rich and capitalism for the poor', which is at the core of most of Pakistan's economic failings. Annual capacity payments exceed Pakistan's healthcare budget sixfold, and IPPs often inflate costs without fear of reprisal due to the sweetheart deals they were granted by every government over the past three decades. Meanwhile, millions of citizens are struggling to pay their inflated power bills.
While some PPAs have been terminated, the government still has much work to do to rectify the situation, including grid modernisation and continuing to encourage a shift to renewables and locally-sourced fuels. It is also worth noting that in most countries, revenue from capacity payments is reinvested into infrastructure and other efficiency improvements instead of being rerouted to shareholders. Here, IPPs and distributors both have the gall to demand government intervention to improve infrastructure for which they are already receiving 'free money'.
An egregious recent example saw one distributor, in response to criticism of its loadshedding policy, actually suggest that the government take over loss-making feeders while letting it reap all the profits. That such a suggestion could seriously be made is in itself a reflection of the power imbalance in the power sector.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
2 days ago
- Express Tribune
SHC suspends ombudsman's order against KE CEO
The Sindh High Court (SHC) on Tuesday suspended the provincial ombudsman's order to remove K-Electric Chief Executive Officer Moonis Alvi and impose a Rs2.5 million fine in a workplace harassment case filed by a former company executive. A two-judge bench comprising Justice Faisal Kamal Alam and Justice Hassan Akbar gave the order while hearing a petition filed by Moonis Alvi, who challenged the ombudsman's ruling on grounds of jurisdiction and procedural flaws. The petitioner appeared in court with his counsel, Barrister Abid Zuberi, who argued that the provincial ombudsman had no legal authority to decide the case as K-Electric is an inter-provincial organisation, supplying electricity beyond Sindh to areas including Lasbela, Hub, and Winder. Barrister Zuberi further argued that such cases fall under the jurisdiction of the federal ombudsman, not the provincial one. He also questioned the legal soundness of the ombudsman's findings, citing previous precedents where jurisdictional conflicts arose in similar cases involving the National Industrial Relations Commission (NIRC) and labour courts. Barrister Zuberi pointed out that the complaint relied heavily on WhatsApp messages and that the proceedings lacked due process. Justice Alam inquired about the legal grounds of the provincial ombudsman's decision, to which the petitioner's counsel responded that both the removal order and the monetary penalty were unlawful. He prayed the court annul the decision and grant interim relief. The bench suspended the implementation of the ombudsman's decision and directed the petitioner to deposit the Rs2.5 million in fine with the SHC registrar. The court did not grant the petitioner's plea for a reduction in the amount. It also issued notices to the provincial ombudsman and the complainant, Mehreen Zehra - former chief marketing officer at KE - for August 8. Later in the day, the SHC issued a written order, noting that the provincial ombudsman lacks jurisdiction over complaints involving inter-provincial institutions and that such matters fall within the federal ombudsman's purview. The written order directed the deputy attorney general, the advocate general Sindh, and other relevant parties to submit their replies before the next hearing. The court also warned that failure to deposit the Rs2.5 million by the petitioner would result in the revocation of the interim relief. On Thursday, the provincial ombudsman found Moonis Alvi guilty of harassment and ordered his removal from office, along with the imposition of the penalty. The court will take up the case again on August 8.
Express Tribune
2 days ago
- Express Tribune
SHC suspends Moonis Alvi's removal in harassment case
Listen to article The Sindh High Court (SHC) on Friday suspended the decision of the Provincial Ombudsperson that had ordered the removal of K-Electric Chief Executive Officer Moonis Alvi over allegations of workplace harassment. The interim relief came during a hearing before a two-member bench headed by Justice Faisal Kamal Alam and comprising Justice Hassan Akbar. The court was hearing a petition filed by Alvi, challenging the ombudsperson's verdict delivered a day earlier. Barrister Abid Zuberi, counsel for the petitioner, submitted that the provincial ombudsperson lacked jurisdiction in the matter, arguing that KE is an interprovincial entity and, therefore, falls under the purview of federal legislation. Also Read: Senior lawyer Khawaja Shamsul Islam shot dead in Karachi The court inquired about the legal flaws in the ombudsperson's ruling. Zuberi contended that the order to remove Alvi and impose a penalty of Rs2.5 million was issued without jurisdiction and in contravention of the relevant laws. 'The ombudsperson's office is not authorised to adjudicate such matters. In similar cases, jurisdiction has been found with the National Industrial Relations Commission (NIRC) or labour courts,' he argued. He further pointed out that KE supplies electricity to areas beyond Sindh, including Lasbela and Hub, which categorises it as an interprovincial company. Therefore, the case should be dealt with by the Federal Ombudsperson. The court, after hearing the arguments, suspended the removal order until the next hearing, scheduled for August 8. It directed Alvi to deposit the Rs2.5 million fine with the Nazir of the SHC. A request by the petitioner's counsel to reduce the amount was declined by the bench. Read: Pakistan hit with 19pc tariff as Trump targets dozens of countries with new duties Mahreen Aziz Khan, a former consultant at KE and the company's first female CxO, had filed a complaint under the Protection Against Harassment of Women at the Workplace Act, 2010, accusing CEO Moonis Alvi of harassment and creating a hostile work environment. In his verdict, Sindh Ombudsman Justice (retd) Shahnawaz Tariq stated that Alvi had committed harassment, created a hostile environment, and caused mental agony at the workplace to the complainant and her team. The ombudsman had ordered Alvi's removal from service under Section 4(ii)(d) of the Act and directed him to pay a fine of Rs2.5 million within one month.
Business Recorder
2 days ago
- Business Recorder
SHC suspends ombudsman's order to remove KE CEO Moonis Alvi
The Sindh High Court (SHC) has suspended provincial ombudsman's decision to remove K-Electric Chief Executive Officer (CEO) Moonis Alvi from his office. The KE through a disclosure form apprised the Pakistan Stock Exchange (PSX) in this regard, saying that the KE CEO has filed a petition in the SHC 'which has suspended the operation of Provincial Ombudsman's Order dated July 31, 2025'. A day ago, the Sindh ombudsman had ordered to remove Alvi from his position of K-Electric's CEO, over his alleged involvement in a case pertaining to 'workplace harassment'. Sindh Ombudsman for the Protection against Harassment of Women at the Workplace Justice (retired) Shah Nawaz Tariq also imposed a fine of Rs2.5 million on Alvi in the same case. 'Moonis Abdullah Alvi is penalised under section 4(4)(ii)(c) of the Act, 2010, and is removed from his service instantly,' read the order issued by the ombudsperson. Sindh ombudsman orders to remove KE CEO Moonis Alvi for 'workplace harassment' Justice (retired) Tariq said in his decision that the KE CEO Alvi harassed and mentally tortured the complainant. 'If Moonis Alvi fails to pay the fine, his movable and immovable property should be confiscated and his CNIC and passport should also be blocked,' he ordered. Meanwhile, Alvi has termed the ombudsman's decision 'deeply distressing' for him, saying the findings did not reflect the truth of the situation as he experienced it. The KE chief executive said he always upheld the values of integrity and dignity in professional interactions, and he deeply believed in fostering safe and inclusive workplaces for all. In its disclosure form submitted to the PSX today, KE said the employee had lodged the complaint against the CEO and three other officials in November 2020 before the ombudsman, after she was terminated from services by the company 'on October 14, 2020, on performance reasons'. Following the complaint, the provincial ombudsman issued a show cause notice on November 24, 2020, to the accused persons. The show cause notice was challenged by the accused persons before the SHC for being without jurisdiction inter alia on the grounds that (i) an ex-employee could not file a complaint under the Act of 2010 after termination from employment (ii) the nature of allegations do not fall within the confines of the Act of 2010 and (iii) KE being a trans-provincial organisation, the complaint was not maintainable before the provincial ombudsman. The KE said the SHC on December 1, 2020, directed that no final order shall be passed by the provincial ombudsman, however, the court later observed that the ombudsman can continue the proceedings of the complaint. Being aggrieved by the observation of the SHC, the accused persons challenged the same before the Supreme Court, which is currently pending adjudication, it added. An appeal was also filed in the relevant office of the Sindh governor, the KE maintained.
