🔲 Public Inquiry Series Episode 15
Topic How Can Pakistan’s Electricity System Be Fixed How Expensive Electricity Bills Can Be Understood and Reduced
🔺 When institutions withhold facts, the responsibility to uncover the truth rests with the public.
Research and Writing Syed Shayan
🔳 Smart WAPDA WAPDA 2.0 - A New Roadmap for Delivering 50 Percent Cheaper Electricity in Pakistan
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Relief of over 50 percent in electricity bills is possible through phasing out private power plants, IPPs, and restoring WAPDA. But how? Read on. And do share your assessment of what percentage reduction is realistically achievable so these recommendations can be presented to the government with confidence.
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The name proposed by our think tank, “WAPDA 2.0,” is essentially a proposal to revive the original 1958 WAPDA institution in line with modern requirements.
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If Pakistan gradually phases out the current IPP model and returns to an integrated and centrally managed WAPDA style system, a significant reduction in electricity tariffs can be achieved. Initial analysis suggests that by addressing capacity payments, idle capacity, and a fragmented system, a substantial reduction in overall bills is possible. The real question is how much reduction can be achieved and under what conditions.
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Pakistan now needs to move beyond outdated power infrastructure towards a “National Energy Highway” which is a fully digital and autonomous system. This would not merely generate or sell electricity but scientifically manage the entire energy ecosystem where generation, transmission, and consumption are monitored and controlled in real time.
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WAPDA 2.0 represents technocratic governance only. Its Board of Directors should consist of technocrats, data scientists, and energy experts rather than politicians or bureaucrats, bringing together nearly 150 fragmented companies into a unified platform to ensure energy security across Pakistan. Proposal
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Pakistan does not need more power plants. It needs a central brain capable of managing energy intelligently.
To read this article in English visit www.SyedShayan.com
Please share your feedback at the end of the article. Selected opinions and comments may be included in the white paper along with name and email address.
In the previous episode you saw how after 1992 Pakistan’s most central and powerful institution WAPDA was dismantled under the banner of reforms into nearly 150 entities and companies. Yet despite this neither were power shortages resolved nor was affordable electricity delivered. In fact from 1994 to 2026 over 32 years more than 200 billion dollars approximately 56 trillion rupees have been paid to IPPs yet today the country still carries an additional debt burden of around 9 billion dollars approximately 2.5 trillion rupees.
The economic damage caused by dismantling WAPDA is visible to the world. Some private power producers under the pretext of supplying electricity engaged in practices that reflect one of the largest corruption stories in Pakistan’s history. Reading reports such as that of Muhammad Ali reveals a troubling reality where even struggling households are paying capacity charges through their electricity bills.
But today the question is not what mistakes were made. The real question is what is the solution
Before moving towards solutions consider one glaring example of institutional failure.
According to NEPRA Pakistan has approximately 46605 megawatts of installed generation capacity. However the national grid operated by the National Transmission and Dispatch Company has a transformation capacity of around 25950 MVA and has practically evacuated up to 25516 megawatts. This means the effective operational capacity of the grid lies between 25000 to 26000 megawatts.
In simple terms the transmission system cannot handle more than about 26000 megawatts. The question then arises why were contracts signed for 46605 megawatts of generation. On what basis was a guarantee given to purchase nearly 20655 megawatts of additional electricity that cannot even be fully utilized.
If average costs and returns are applied to this excess capacity the financial burden amounts to approximately 2 to 2.5 trillion rupees annually which is ultimately recovered from the public through capacity payments.
This raises a critical question. When the grid could only handle 26000 megawatts who approved agreements for over 46000 megawatts. The Ministry of Energy provided policy approval CPPA G signed power purchase agreements and NEPRA approved tariffs and financial terms. This was not a failure of one institution but a collective decision across multiple entities created under reforms. Yet today who determines accountability
Either the public must answer this or the relevant authorities must explain the reality because rational thinking struggles to accept such a situation. Otherwise it can only be described as institutional absurdity.
It is important to clarify that 46605 megawatts represents total installed capacity not actual usable electricity. This includes around 2813 megawatts from net metering and the burden of capacity payments arises not only from transmission constraints but also from demand planning failures and idle plants. Therefore the 20000 megawatt gap should be understood as an indicative imbalance not an absolute waste.
This single example demonstrates how lack of coordination between institutions has damaged Pakistan’s power sector over the past three decades. Despite multiple entities there is no clear central authority. Had a strong central command existed such losses and inefficiencies could have been avoided. This is the foundation of the proposal to restore WAPDA.
Moving from concept to structure WAPDA 2.0 represents a modernized version of the original institution. The name remains trusted but the system is entirely upgraded. Its internal flaws are removed performance enhanced and features aligned with the digital era.
This concept is easy to understand. Just like software updates the name remains but the system improves. WAPDA 2.0 symbolizes a transparent technology driven institution redesigned for modern needs.
The name WAPDA carries nationwide recognition unlike DISCOs NTDC or CPPA which remain unfamiliar to the public. WAPDA 2.0 bridges both generations combining trust with modern functionality.
This Smart WAPDA would unify over a hundred fragmented entities under a single command similar to advanced grid models like Spain saving billions in administrative costs.
It would dismantle IPP dominance and create a market where only low cost electricity is integrated into the grid. It would function as a National Energy Highway using artificial intelligence and smart technologies to reduce theft and line losses while prioritizing local and hydel resources over imported fuels potentially relieving the economy of a burden exceeding 45 trillion rupees.
Globally similar transformations have already taken place. The United States introduced Government 2.0 Germany implemented Industry 4.0 and Spain’s Redeia transformed its grid into a data driven digital system. The United Kingdom developed a flexible intelligent grid France optimized centralized systems India unified its grid under One Nation One Grid Ethiopia maintained strong state control and Vietnam retained centralized authority through EVN.
Following these global trends WAPDA 2.0 can establish a new energy market in Pakistan where only efficient and affordable electricity survives supported by AI driven monitoring and transparency.
Now how can this model reduce electricity tariffs
Initial analysis shows that by addressing capacity payments idle capacity and system fragmentation significant savings can be achieved.
The following eight reforms outline how this reduction can be realized
1. capacity payments take or pay contracts and excess contracted capacity can reduce costs by 20 to 25 percent.
2. renegotiating IPP agreements including dollar indexation and high returns can reduce costs by 5 to 8 percent.
3. optimizing or retiring inefficient and idle plants can reduce costs by 5 to 7 percent.
4. improving transmission and distribution efficiency can reduce costs by 3 to 5 percent.
5. controlling inefficiencies theft and poor recovery in DISCOs can reduce costs by 5 to 7 percent.
6. shifting to a least cost fuel mix and prioritizing local energy sources can reduce costs by 4 to 6 percent.
7. reducing circular debt and financing costs can reduce costs by 3 to 5 percent.
8. eliminating administrative inefficiencies and ensuring transparent procurement can reduce costs by 2 to 4 percent.
Combined these reforms indicate a potential reduction of approximately 46 to 55 percent in electricity costs. This is not merely a claim but a cumulative effect of structural reforms.
However these estimates depend entirely on implementation. The actual reduction will depend on how seriously reforms are executed and how efficiently the system is managed.
[To be continued in the next episode]
To read this article in English visit www.SyedShayan.com
Please share your feedback at the end of the article. Selected opinions and comments may be included in the white paper along with name and email address.
In the previous episode you saw how after 1992 Pakistan’s most central and powerful institution WAPDA was dismantled under the banner of reforms into nearly 150 entities and companies. Yet despite this neither were power shortages resolved nor was affordable electricity delivered. In fact from 1994 to 2026 over 32 years more than 200 billion dollars approximately 56 trillion rupees have been paid to IPPs yet today the country still carries an additional debt burden of around 9 billion dollars approximately 2.5 trillion rupees.
The economic damage caused by dismantling WAPDA is visible to the world. Some private power producers under the pretext of supplying electricity engaged in practices that reflect one of the largest corruption stories in Pakistan’s history. Reading reports such as that of Muhammad Ali reveals a troubling reality where even struggling households are paying capacity charges through their electricity bills.
But today the question is not what mistakes were made. The real question is what is the solution
Before moving towards solutions consider one glaring example of institutional failure.
According to NEPRA Pakistan has approximately 46605 megawatts of installed generation capacity. However the national grid operated by the National Transmission and Dispatch Company has a transformation capacity of around 25950 MVA and has practically evacuated up to 25516 megawatts. This means the effective operational capacity of the grid lies between 25000 to 26000 megawatts.
In simple terms the transmission system cannot handle more than about 26000 megawatts. The question then arises why were contracts signed for 46605 megawatts of generation. On what basis was a guarantee given to purchase nearly 20655 megawatts of additional electricity that cannot even be fully utilized.
If average costs and returns are applied to this excess capacity the financial burden amounts to approximately 2 to 2.5 trillion rupees annually which is ultimately recovered from the public through capacity payments.
This raises a critical question. When the grid could only handle 26000 megawatts who approved agreements for over 46000 megawatts. The Ministry of Energy provided policy approval CPPA G signed power purchase agreements and NEPRA approved tariffs and financial terms. This was not a failure of one institution but a collective decision across multiple entities created under reforms. Yet today who determines accountability
Either the public must answer this or the relevant authorities must explain the reality because rational thinking struggles to accept such a situation. Otherwise it can only be described as institutional absurdity.
It is important to clarify that 46605 megawatts represents total installed capacity not actual usable electricity. This includes around 2813 megawatts from net metering and the burden of capacity payments arises not only from transmission constraints but also from demand planning failures and idle plants. Therefore the 20000 megawatt gap should be understood as an indicative imbalance not an absolute waste.
This single example demonstrates how lack of coordination between institutions has damaged Pakistan’s power sector over the past three decades. Despite multiple entities there is no clear central authority. Had a strong central command existed such losses and inefficiencies could have been avoided. This is the foundation of the proposal to restore WAPDA.
Moving from concept to structure WAPDA 2.0 represents a modernized version of the original institution. The name remains trusted but the system is entirely upgraded. Its internal flaws are removed performance enhanced and features aligned with the digital era.
This concept is easy to understand. Just like software updates the name remains but the system improves. WAPDA 2.0 symbolizes a transparent technology driven institution redesigned for modern needs.
The name WAPDA carries nationwide recognition unlike DISCOs NTDC or CPPA which remain unfamiliar to the public. WAPDA 2.0 bridges both generations combining trust with modern functionality.
This Smart WAPDA would unify over a hundred fragmented entities under a single command similar to advanced grid models like Spain saving billions in administrative costs.
It would dismantle IPP dominance and create a market where only low cost electricity is integrated into the grid. It would function as a National Energy Highway using artificial intelligence and smart technologies to reduce theft and line losses while prioritizing local and hydel resources over imported fuels potentially relieving the economy of a burden exceeding 45 trillion rupees.
Globally similar transformations have already taken place. The United States introduced Government 2.0 Germany implemented Industry 4.0 and Spain’s Redeia transformed its grid into a data driven digital system. The United Kingdom developed a flexible intelligent grid France optimized centralized systems India unified its grid under One Nation One Grid Ethiopia maintained strong state control and Vietnam retained centralized authority through EVN.
Following these global trends WAPDA 2.0 can establish a new energy market in Pakistan where only efficient and affordable electricity survives supported by AI driven monitoring and transparency.
Now how can this model reduce electricity tariffs
Initial analysis shows that by addressing capacity payments idle capacity and system fragmentation significant savings can be achieved.
The following eight reforms outline how this reduction can be realized
1. capacity payments take or pay contracts and excess contracted capacity can reduce costs by 20 to 25 percent.
2. renegotiating IPP agreements including dollar indexation and high returns can reduce costs by 5 to 8 percent.
3. optimizing or retiring inefficient and idle plants can reduce costs by 5 to 7 percent.
4. improving transmission and distribution efficiency can reduce costs by 3 to 5 percent.
5. controlling inefficiencies theft and poor recovery in DISCOs can reduce costs by 5 to 7 percent.
6. shifting to a least cost fuel mix and prioritizing local energy sources can reduce costs by 4 to 6 percent.
7. reducing circular debt and financing costs can reduce costs by 3 to 5 percent.
8. eliminating administrative inefficiencies and ensuring transparent procurement can reduce costs by 2 to 4 percent.
Combined these reforms indicate a potential reduction of approximately 46 to 55 percent in electricity costs. This is not merely a claim but a cumulative effect of structural reforms.
However these estimates depend entirely on implementation. The actual reduction will depend on how seriously reforms are executed and how efficiently the system is managed.
[To be continued in the next episode]
This article is very eye opening.