Rs6.4 trillion paid to IPPs power producers in 5 years

Islamabad: Pakistan paid around Rs6.4 trillion in capacity payments to power producers over five years, with annual payments climbing from Rs613.9 billion in 2020 21 to Rs1.9 trillion in 2023 24, revealing the massive financial burden carried by the power sector.

The figures were presented by Minister for Energy Power Division Sardar Awais Ahmad Khan Leghari in response to a question from Dr Mahreen Razzaq Bhutto in the National Assembly.

According to the official figures, capacity payments stood at Rs613.9 billion in 2020 21 and rose to Rs775.9 billion in 2021 22.

The payments then jumped sharply to Rs1.306 trillion in 2022 23 before reaching the highest level of Rs1.902 trillion in 2023 24.

In 2024 25, the government paid another Rs1.807 trillion to power producers.

Taken together, the five year payments amount to about Rs6.4 trillion, showing how heavily capacity charges have weighed on the country’s electricity finances.

At the same time, the government says changes to power agreements have produced major savings. The Energy Minister told the National Assembly that agreements with six Independent Power Producers were terminated following efforts by a government task force.

The government also revised agreements with other power producers to reduce tariffs. Officials said these changes are expected to save Rs4.3 trillion over the remaining life of the power plants.

The figure represents savings spread over the future period of the plants rather than money already recovered by the government.

Dr Mahreen Razzaq Bhutto had specifically asked how much capacity payment was being made to Independent Power Producers each year during the last five years and what savings had been achieved through renegotiated agreements.

The government response shows that the biggest annual payment came in 2023 24, when power producers received Rs1.902 trillion. Although the payment fell slightly to Rs1.807 trillion in 2024 25, it remained almost three times the level recorded five years earlier.

The figures highlight the growing size of capacity payments even as the government tries to reduce the cost of power contracts through termination and renegotiation.

The figures and ministerial reply were laid before the National Assembly during its 29th session.