Extending this perspective, he suggested that enduring 874 hours of load shedding annually—about 10 percent of the year—could result in savings of up to Rs100 billion in capacity payments
ISLAMABAD: Federal Minister for Energy Awais Leghari has underscored Pakistan’s troubling position as having the highest electricity costs in the region, and outlined government plans to address these issues, particularly concerning Independent Power Producers (IPPs). Speaking at the National Youth Convention in Islamabad, Leghari highlighted ongoing efforts to resolve these challenges and expressed optimism about forthcoming improvements within the next one to two months.
Leghari’s remarks shed light on the discrepancy between Pakistan’s reported and actual power generation capacities. Contrary to the often-cited figure of 45,000 megawatts (MW), the Minister clarified that Pakistan’s true power generation capacity stands at 29,000 MW. He elaborated that the country’s year-round electricity demand averages 7,000 MW, while peak demand can reach 24,000 MW. This revelation points to a significant overcapacity that contributes to high costs and inefficiencies in the power sector.
Awais Leghari drew attention to the financial implications of maintaining surplus capacity. He noted that keeping an additional 1,845 MW, necessary only for 85 hours annually, costs the national treasury Rs 50 billion each year. Leghari proposed that if Pakistan could endure 85 hours of load shedding spread over 40 days, the government could potentially save this substantial amount. Extending this perspective, he suggested that enduring 874 hours of load shedding annually—about 10 percent of the year—could result in savings of up to Rs 100 billion in capacity payments.
These payments are financial compensations made to power producers to ensure they remain available, regardless of actual electricity consumption. Leghari emphasized that capacity payments, though intended to prevent load shedding and ensure power availability, are a significant financial burden on the national budget. The high costs associated with these payments contribute to the overall expense of electricity, which is reflected in consumer bills.
The Minister’s address aligns with broader government initiatives aimed at improving the efficiency of Pakistan’s energy sector. The anticipated positive news regarding IPPs, which Leghari expects to announce in the coming months, is expected to bring relief to both the public and the industrial sectors. These measures will involve close collaboration with intelligence agencies and other institutions to address issues related to power production and distribution.
By tackling these challenges, the government aims to alleviate the financial strain on consumers and improve the sustainability of Pakistan’s energy sector. The proposed strategies are part of a larger effort to balance electricity supply and demand, reduce unnecessary capacity payments, and ultimately lower the cost of electricity for consumers.
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