🔲 How Can Pakistan’s Electricity System Be Fixe...

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🔲 How Can Pakistan’s Electricity System Be Fixed? Episode 9 Written by Syed Shayan

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Is Pakistan’s annual electricity requirement truly 40,000 to 45,000 MW? Who has shaped and sustained this narrative?

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According to the Economic Survey of Pakistan, the country’s actual average annual electricity demand ranges between 12,000 and 15,000 MW.

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Despite this, Pakistan’s power planning has consistently added capacity far in excess of demand. Agreements have been signed with nearly 100 IPPs across multiple categories, even though a significantly smaller portfolio could have met national requirements more efficiently.

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Today, Pakistan is paying approximately PKR 2 to 2.1 trillion annually in capacity payments to IPPs and other power plants. These payments are recovered directly from consumers through monthly electricity bills, regardless of whether the plants generate electricity or remain idle.

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On behalf of our think tank, we formally challenge that if these figures are inaccurate, they should be disproven through official documentation. Otherwise, unnecessary and high cost IPP contracts must be urgently renegotiated or terminated, except for a limited number of essential foreign agreements already under review.

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Why should consumers continue to pay not only for the electricity they use, but also for the cost of inefficient and structurally flawed contracts?

A clear understanding of Pakistan’s electricity system requires a distinction between three fundamentally different concepts. First is installed capacity, which refers to total potential generation and currently stands at approximately 46,000 MW. This should not be interpreted as actual demand. Second is peak demand, representing the highest level of consumption at a given point in time. In Pakistan, this occasionally reaches around 30,000 MW during summer months, but only for limited hours or short periods. Third is average demand, which reflects actual consumption over the course of an entire year. Over the past decade, this has remained consistently within the range of approximately 10,300 to 13,400 MW.

The claim that Pakistan requires 40,000 to 45,000 MW has been repeated for decades. However, available official evidence does not substantiate this position. Government publications, including the Economic Survey of Pakistan, typically report electricity consumption data for the first nine months of the fiscal year, from July to March. These figures are often used to construct broader national narratives.

When this nine month consumption is converted into an annualised hourly average, Pakistan’s actual average demand is approximately 12,000 MW. This finding directly challenges the notion that 40,000 to 45,000 MW represents a continuous national requirement. Presenting such figures as baseline demand is not only technically inaccurate, but also policy distorting.

At the core of the issue lies a persistent conflation of three distinct metrics: capacity, peak demand, and average demand. This conflation has created a misleading public narrative. In reality, the challenge facing Pakistan is not a shortage of electricity, but a structural imbalance in the system, where generation capacity, transmission capability, and actual consumption are not aligned.

Internationally, these three indicators are treated separately and analysed with precision. Peak demand reflects short duration spikes, average demand captures long term consumption patterns, and capacity defines the upper limit of supply. Effective policy is built on maintaining clarity between these concepts. In Pakistan, however, their frequent overlap in discourse has led to the misconception that peak demand represents a constant national requirement.

A review of the past decade provides further clarity.

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Actual Average Demand based on annual consumption Ten year trend:

1. FY 2024 25 July to March nine months Total consumption: 80,111 GWh Average demand: approximately 12,000 MW

2. FY 2023 24 Average demand: approximately 12,600 MW

3. FY 2022 23 Average demand: approximately 12,900 MW

4. FY 2021 22 Average demand: approximately 12,800 to 13,200 MW

5. FY 2020 21 Average demand: approximately 12,900 MW

6. FY 2019 20 Average demand: approximately 12,500 MW

7. FY 2018 19 Average demand: approximately 12,000 MW

8. FY 2017 18 Average demand: approximately 11,500 MW

9. FY 2016 17 Average demand: approximately 11,000 MW

10. FY 2015 16 Average demand: approximately 10,300 to 10,500 MW

Sources include Economic Survey 2024 25, NEPRA State of Industry Report 2024 25, and Pakistan Electricity Review 2025.

These figures consistently demonstrate that Pakistan’s actual average electricity demand has remained within the range of 12,000 to 15,000 MW over the past decade, significantly below the widely cited figures of 40,000 to 45,000 MW.

This leads to a critical policy question. If the combined capacity of private power producers stands at approximately 20,700 MW, while actual average demand remains between 12,000 and 15,000 MW, what justified the expansion of such a large private generation base?

This question becomes even more pressing in light of the substantial capacity payments being made annually. If a significant portion of installed capacity remains underutilised, the economic efficiency and public value of the current system must be rigorously reassessed.

[To be continued in the next episode.]