Pakistan Reviews Power Projects Amid Overcapacity Concerns

Pakistan is reassessing its power projects due to energy overcapacity and high financial costs. The review includes hydropower and nuclear plants, with a focus on efficiency and economic sustainability. Key issues highlighted include high capacity payments to IPPs and concerns over project agreements.

Pakistan is undertaking a comprehensive review of its power projects, including hydropower and nuclear plants, in response to concerns about energy overcapacity and financial strain. This initiative aims to assess the viability and efficiency of these projects to ensure alignment with current demand and economic sustainability.

The review is particularly critical as the government has reportedly disbursed approximately Rs1 trillion in capacity payments to 26 independent power producers (IPPs) using gas, regasified liquefied natural gas (RLNG), and residual furnace oil (RFO) since 2015. Minister for Power Awais Leghari emphasized the need to optimize power generation and warned against hasty actions that could lead to significant financial repercussions, referencing past cases like Reko Diq.

The task force currently assessing the IPPs is expected to provide detailed outcomes within two weeks. The review also includes scrutinizing IPP agreements that are considered faulty and overpriced, with a focus on heat audits and Return on Equity (RoIs) to alleviate the burden on power consumers.

(With inputs from agencies.)