Idle Furnaces, Full Bills: How Pakistan’s Imported Coal Plants Became the Mother of Circular Debt

There is a cruel irony sitting at the heart of Pakistan’s power sector. While families across the country endure load-shedding and industries throttle production for want of reliable electricity, five imported coal power plants — built with some of the most advanced Chinese supercritical technology in South Asia, financed under sovereign guarantees, and paid for in hard-earned foreign exchange — spend most months sitting nearly idle. And yet, whether they generate a single unit of electricity or not, the nation pays for them in full. This is not a technical footnote. It is the mechanism at the very center of Pakistan’s circular debt crisis, and it deserves to be understood in plain terms by every citizen who has ever cursed a power outage or watched the rupee slide against the dollar.

A review of monthly energy-purchase data filed with NEPRA and CPPA-G — the country’s power purchasing agency — for the period March 2025 to July  2026 tells a startling story. Pakistan’s five major imported coal-fired plants, each contracted with a dependable capacity between roughly 600 and 1,320 megawatts, made by a great friend of Pakistan, were expected to be workhorses of the national grid. Instead, across sixteen months of data, their average capacity utilization ranged from as low as 10.7 % to, at best, 60.4 % — and even that “best” performer never once crossed the 80 % benchmark written into its own power purchase agreement.  leave 

Consider the specifics. China Power Hub Generation Company, a 1,320 MW plant, averaged barely 10.7 % capacity utilization over the period reviewed, with entire months — April 2025, November 2025, December 2025, February 2026, March 2026 — at zero output. Jamshoro Power Company’s coal-fired plant averaged 18.5 %, with several months at flat zero and others barely scraping past single digits. Port Qasim Electric Power Company, a 1,320 MW facility, averaged 32.1 %, dipping to just 3.3 % utilization in October 2025. Lucky Electric Power Company averaged 33.4 %, including months of complete or near-complete shutdown. Even Huaneng Shandong Ruyi Energy, the strongest performer of the five with an average of 60.4 %, fell as low as 24.6 % in October 2025 — and never approached full design capacity even in its best month.

These are not rounding errors. These are multi-billion-dollar power stations, built to run as baseload generation, operating for most of the year the way a spare generator might run during a rare emergency.

To understand why this matters so much, it helps to strip away the jargon. A coal power plant’s capacity factor (sometimes called its utilization factor or, in Pakistan’s power purchase agreements, its plant factor) is simply the %age of a plant’s maximum possible output that it actually produces in a given period. If a 1,000 MW plant ran flat-out, twenty-four hours a day, for an entire month, it would produce a certain maximum number of electricity units. If it only produces, say, 20 % of that maximum, its capacity factor for that month is 20 % — meaning the plant sat idle, partially loaded, or offline for the vast majority of the time.

This single number is the difference between a power plant that earns its keep by generating cheap, reliable electricity, and one that becomes a fixed liability on the national balance sheet regardless of how much power it actually delivers.

Here is where the real damage is done. Under the take-or-pay structure common to Pakistan’s independent power producer agreements, plant owners are guaranteed capacity payments — fixed monthly payments tied to the plant simply being available to generate, not to how much electricity it actually sends to the grid. Reportedly, several of these newer imported coal contracts were negotiated with plant-factor assumptions as high as 80 %, a marked jump from the roughly 60 % benchmark used for earlier-generation IPPs. That assumption matters enormously, because capacity payments are calculated against it. A plant that was contractually expected to run at 80 % but instead limps along at 10 or 30 % still collects a capacity payment calculated as though it were doing its job — while national planners are forced to explain why the lights are going out.

This is the mechanism through which underutilized power plants translate directly into circular debt. Pakistan’s power sector already owes trillions of rupees in unpaid and deferred obligations threaded through generation companies, fuel suppliers, and distribution companies. Every month that an imported coal plant sits at single-digit utilization while still drawing a full capacity payment, that debt grows a little heavier — and a country already negotiating one bailout after another sinks a little deeper into the posture the prime minister himself has rightly and repeatedly criticized: a nation reduced to a global begging bowl, borrowing dollars it does not have to service debts it should never have accumulated in the first place.

It is worth pausing on the technology itself. These are not ageing, obsolete units. They were built using modern Chinese supercritical coal technology — among the most efficient large-scale coal generation designs deployed anywhere in the world today, comparable in rated capacity to plants such as India’s 1,320 MW Khurja Super Thermal Power Plant in Uttar Pradesh, the 1,320 MW Krishnapatnam plant in Andhra Pradesh, or NTPC’s 1,320 MW Solapur Super Thermal Power Station in Maharashtra. Pakistan did not import cheap or inferior machinery. It imported first-rate generating capacity and then, through a combination of dispatch decisions, fuel-import constraints, foreign-exchange shortages, and — many would argue — simple policy neglect, left much of that capacity to gather dust.

To be fair, there are legitimate operational reasons a coal plant’s monthly output fluctuates: merit-order dispatch rules that push cheaper hydel, nuclear, and domestic-fuel generation ahead of imported coal in the queue; seasonal shifts in national demand; foreign-exchange constraints that limit how much imported coal can be purchased in a given month; and periodic maintenance outages. These are real constraints, not excuses invented after the fact. But they do not explain away months of complete zero-output from plants built specifically to serve as baseload generation, nor do they explain why the contractual capacity-payment obligation continues to run at full tilt even as the turbines stand still.

The fix is not mysterious, even if it is politically difficult. First, the terms of these power purchase agreements — including the plant-factor assumptions that determine capacity payments — need public, transparent renegotiation, ideally benchmarked against actual multi-year performance rather than optimistic projections made at financial close. Second, dispatch and fuel-procurement planning need to treat these plants as the baseload assets they were designed to be, not as discretionary options switched on only when convenient. Third, and perhaps most importantly, the oversight bodies charged with holding these plants accountable — NEPRA and CPPA-G chief among them — need the independence, the data infrastructure, and the political cover to ask hard questions of powerful sponsors without fear of consequence. Modern data systems, transparent public dashboards, and rules-based automated monitoring could go a long way toward removing the discretion and opacity that currently allow chronic underutilization to persist unchallenged year after year.

None of this is abstract. Every hour of load-shedding ordered because “the grid doesn’t have enough power” while multi-billion-dollar coal plants sit at single-digit utilization is a policy failure imposed on ordinary households, on small businesses running generators they cannot afford, on students studying by candlelight, on factories that cannot fulfill export orders. Every rupee added to circular debt through capacity payments for idle plants is a rupee that will eventually be recovered from consumers through higher tariffs, or from taxpayers through another round of borrowing. Pakistan cannot keep asking why it remains a global begging bowl while quietly continuing to pay full price for power plants that show up to work a fraction of the time they were built for. The data is public. The mechanism is understood. What is missing is the political will to act on it.

This piece is based on an analysis of monthly XWDISCOs energy purchase data published by NEPRA and CPPA-G for March 2025–July 2026.