EDITORIAL: Power Minister Awais Leghari’s recent detailed assessment of the state of the power sector and the government’s future plans for it underscore the severe challenges that have long afflicted this vital area. Specifically, his disturbing assertion, in a speech given at the International Hydropower Conference, that only 87MW of the 17,000MW new power projects planned under the indicative generation expansion plan for the next 10 years adhere to the least-cost methodology, while the remaining projects remain overpriced, emphasises this long-standing turmoil that has led to excessive electricity bills, hours-long load-shedding, and a heavy burden on consumers, industries and businesses, and resultantly the wider economy. It is, therefore, easy to agree with his contention that the “country and consumers can no longer afford this expensive energy”.
In another important declaration, he also announced that the government retained the “legal right” to terminate 10,000MW of projects from the planned 17,000MW, which have not yet reached financial close, in a bid to curb out-of-control energy costs.
Furthermore, he stressed that if any projects have strategic value, especially from a national security perspective, the additional costs beyond the least-cost principle should be financed by federal and provincial governments through the Public Sector Development Programme, with consumers not bearing these extra costs.
Here, the questions he raised regarding the value consumers would accrue from a project like the Diamer-Bhasha Dam are worth noting. Considering that there are significant transmission costs associated with the dam, currently estimated at $3 billion, as well as substantial power generation expenses, which if integrated into the tariffs presently in place, would raise the national power rate by Rs5 per unit, it does become vital to assess whether the potential benefits justify the financial burden on consumers. This is especially important given the scale and complexity of such large-scale projects, already considerably impacted by funding availability, political stability, environmental concerns and technical challenges in construction.
It goes without saying that a multitude of factors, including inefficient power generation, the dilapidated distribution infrastructure, ill-suited tariff policies, weak recoveries and widespread electricity theft have collectively contributed to chaos in the power sector.
The major responsibility for this disarray, many would say the sole responsibility, lies with the government, given its outsized role in almost every aspect of the sector, from policymaking and regulation to power generation and distribution.
A history of disastrous decisions driven by narrow political agendas and gross incompetence in planning resulted in the addition of power plants to the system without regard to the necessary upgrades in transmission and distribution infrastructure, further straining an already vulnerable network. As a consequence, the country has long grappled with massive under utilisation, with only one-third of the 46,000MW of installed capacity used annually.
In light of this, the power minister’s statement that future capacity additions will be driven solely by “technology, demand, transmission lines and tariffs”, with only least-cost projects considered, reflects a positive shift in approach. Furthermore, his affirmation that the government would no longer assume all responsibility and risk for power procurement is also promising.
However, the effectiveness and longevity of this change remain uncertain as political expediency has routinely derailed reform efforts in the past. Therefore, it remains to be seen how well the much-touted competitive electricity market, slated to start operations in March, and meant to gradually phase out the government’s role as the sole buyer of electricity will function in practice, and whether it would help achieve long-standing goals of improving efficiency, reducing costs, and fostering more competition and transparency in the energy landscape.
It is clear that expecting consumers and the wider economy to continue to bear the burden for the power sector’s vast inefficiencies is no longer sustainable, and that there is no alternative to a far-reaching reform effort aimed at addressing its multifaceted ills.
Copyright Business Recorder, 2025
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