ISLAMABAD – Pakistan’s power sector delivered staggering new shock, with IPPs getting Rs2.935 trillion in just 11 months, an amount even higher than the country’s defence budget.
As the June billing is still pending, the massive payout could climb further, putting fresh pressure on an already strained economy. Pakistan’s power sector has come under fresh scrutiny after independent power producers (IPPs) received a staggering Rs2.935 trillion, or around $12 billion, during the first 11 months of the current fiscal year, an amount exceeding the country’s roughly $10 billion defence budget.
The massive payout reignited debate over Pakistan’s costly electricity structure, with economic experts questioning whether billions being channelled into power payments could instead have been invested in long-term infrastructure such as dams and cheaper sources of electricity.
Experts have also called for major administrative reforms, including the creation of new provinces, arguing that decentralisation could help address structural weaknesses and mounting financial pressures.
Ministry of Energy has sought to clarify the situation, maintaining that the government did not pay any power plant beyond its approved limits. According to the ministry, payments to IPPs were made strictly under tariffs determined by the National Electric Power Regulatory Authority (NEPRA) and agreements signed between the government and power producers. However, the financial burden could grow further.
Sources said billing for June 2026 has not yet been completed, meaning the Rs2.935 trillion figure does not represent the final amount for the 11-month period.
The payment figures reveal a striking disparity between electricity generation and the amount paid to different categories of power plants. Imported-coal-based plants generated 12,048 GWh during the period but received a massive Rs637.91 billion—the highest payment among the listed categories.
RLNG-based plants generated 16,097 GWh and received another Rs527.10 billion. The figures have intensified concerns over the cost of relying on imported fuels, particularly amid currency depreciation and fluctuations in international energy prices.
Hydropower remained the biggest source of generation among the listed categories, producing 34,234 GWh during the first 11 months. The government paid hydropower projects Rs375.04 billion for that electricity. Nuclear power plants supplied 21,031 GWh to the national grid, with payments reaching Rs469.44 billion.
Local-gas-fired plants generated 10,588 GWh and received Rs200.84 billion. Wind power projects produced 3,804 GWh, for which they were paid Rs144.43 billion. Solar projects generated 1,074 GWh and received Rs36.51 billion, while bagasse-based plants generated 714 GWh and were paid Rs14.82 billion.
The scale of the payments has once again placed IPPs at the centre of Pakistan’s energy debate. The depreciation of the Pakistani rupee against the dollar and higher international prices of imported coal and LNG have added pressure to electricity generation costs, while capacity-related payments have remained a major component of the sector’s financial burden.
