Senate seeks review of IPP deals over rising power costs

Islamabad: Independent Power Producers (IPPs) faced strong criticism in the Senate after lawmakers raised serious concerns over billions of rupees paid as capacity payments to power plants that are not fully operational, calling the practice an unnecessary burden on electricity consumers.

The issue was discussed during a meeting of the Senate Standing Committee on Cabinet Secretariat, where members questioned the impact of IPP agreements on electricity prices and demanded a complete review of power generation contracts.

The committee expressed concern that consumers are paying for electricity capacity even when some power plants are not producing electricity according to expectations.

Members said such payments increase the cost of electricity and place additional pressure on ordinary citizens already facing high power bills.

The committee directed the National Electric Power Regulatory Authority (NEPRA) to provide complete details of all Independent Power Producers, including their electricity tariffs, generation capacity, installation costs and rate analysis.

The committee chairman stressed that electricity prices must be reviewed and unnecessary costs should be removed to provide relief to consumers. The committee also discussed whether some IPPs had affected the government’s solar energy policy.

Members observed that certain power producers had, apparently, created difficulties for the promotion of solar energy initiatives and questioned whether existing agreements were supporting or limiting cheaper energy options.

The committee demanded transparency in tariff decisions and questioned why NEPRA had not provided complete tariff determination details despite repeated directions. Lawmakers said clear information was necessary to understand how electricity prices are decided and why consumers continue to face expensive power bills.

The committee also discussed imported coal and RLNG based power plants installed in Punjab instead of coastal areas. Officials explained that these plants were established near major electricity demand areas to improve supply efficiency.

However, the committee directed NEPRA to provide a detailed comparison of all power projects so that lawmakers could examine costs, benefits and long term impact. The chairman said the government should consider renegotiating IPP agreements where necessary and review contracts of projects that are no longer useful.

He said reducing electricity prices requires serious decisions and better management of power sector agreements.

The meeting was chaired by Senator Rana Mahmood Ul Hassan and attended by Senators Mohammed Abdul Qadir and Aimal Wali Khan, while other members participated in person and online.

The committee also reviewed issues related to circular debt, which remains one of the biggest challenges facing Pakistan’s power sector. Members said increasing electricity costs and financial problems in the energy sector require immediate attention because they directly affect households, businesses and the national economy.

The committee’s discussion highlighted concerns over the relationship between power generation costs, IPP agreements and electricity bills paid by consumers.

Members called for accountability, transparency and a detailed examination of agreements to ensure that the electricity system works in the public interest. The committee will continue reviewing IPP agreements and related energy sector issues in upcoming