Public Investigative Series | Episode 50How Can Pakistan’s Power System Be Fixed?Why Were Government Power Plants Given the Same Terms and Benefits as Private IPPs?According to details presented before Parliament by the Ministry of Energy on September 9, 2026 , Pakistan currently has 105 IPP agreements.It is one of the darkest chapters in the history of our country and its people that a country whose electricity requirements could have been met with no more than seven or eight power plants ended up with 105 power plants. At the same time, these agreements incorporated the condition of capacity payments, under which the nation remains responsible for paying the costs and profits of these plants whether they operate or not.Even more troubling is the fact that many of the people who were in power when this system was designed are once again in positions of authority and continue to operate the same system.The mechanism through which money is extracted from the pockets of the public in the name of IPPs is such a deeply flawed design that history will never forgive it.The result is that, because of these 105 IPPs, the electricity bill of an ordinary household has now become larger than its entire monthly grocery budget.How Did Government Power Plants Enter the IPP System?In 2015, the Nawaz Sharif government introduced a fundamental change. The IPP system, which had originally been introduced in Pakistan primarily to attract private investment in power generation, was expanded to include government-owned power projects as well.Changes were made to the relevant laws and power policy, creating a pathway for government-owned power plants to operate under an IPP Mode.The government's position was that this would allow power projects to be completed more quickly and would later make their privatization easier.However, this decision raised a fundamental question:When both the capital and the power plant were owned by the government, why was there a need to operate it under a system designed for private IPPs?What Exactly Is an IPP?IPP stands for Independent Power Producer — an entity that generates electricity independently of the traditional government-owned power generation system and operates as a separate company.When the IPP system was introduced in Pakistan, the word "Independent" essentially referred to privately owned power producers.In 1994, the Benazir Bhutto government introduced the IPP system with the primary objective of attracting domestic and foreign private investors to establish power plants.That is why the government's policy at the time was focused on electricity generation through the private sector. The World Bank also referred to Pakistan's experiment using the term "Independent Private Power", while these projects were described as "Independent Private Power Projects (IPPs)."Therefore, from the beginning, the term IPPs in Pakistan generally referred to privately owned power plants.What Changed in 2015?The situation changed during the Nawaz Sharif government's tenure in 2015.The concept of IPPs, which had been operating in Pakistan since 1994 primarily as a system for private power plants, was expanded.A pathway was created to bring electricity projects owned or controlled by federal and provincial governments, as well as government-owned companies, into a similar commercial and contractual framework.These government projects were referred to as Public Sector Power Projects (PSPPs), while some projects were operated under arrangements similar to IPPs — commonly described as operating in IPP Mode.As a result, the distinction that previously existed between private IPPs and government power projects became increasingly blurred in practice.For simplicity, the entire system can now be understood through two broad categories:1. Private IPPsThese are power plants established by Pakistani or foreign private investors that sell electricity under agreements with the government or government-owned electricity purchasing entities.2. Government Projects Operating Under an IPP-Style SystemThese are power plants owned by federal or provincial governments, or by government-owned and government-controlled companies, but operating within the broader commercial system of electricity sales, tariffs and contractual arrangements.This is why such government projects can also appear alongside IPPs in official lists and documents.Why Is This Distinction Important?This distinction is extremely important because when the government says that Pakistan currently has 105 IPP agreements , it does not necessarily mean that all 105 power plants are privately owned.The figure includes power projects of different ownership structures and different types.Large private power projects such as China Power Hub, Port Qasim and Sahiwal Coal are included, while government-related power projects such as Haveli Bahadur Shah, Balloki and Chashma Nuclear also appear within the broader list.This is also why the officially reported number of IPPs has changed over time.In 2023 , the Power Division told a Senate committee that there were 104 IPPs.In November 2024, an official response presented in the National Assembly reported 93 operational IPPs.Now, according to the latest information presented before Parliament in September 2026 , there are 105 existing IPP agreements.(To Be Continued)
