Pakistan’s Senate Standing Committee on Cabinet Secretariat has ordered the National Electric Power Regulatory Authority (NEPRA) to launch a comprehensive investigation into the operational performance and financial arrangements of Independent Power Producers (IPPs). The directive comes as the country grapples with surging electricity costs and a growing public outcry over the sustainability of the current power procurement model.
The committee, chaired by Senator Saleem Mandviwalla, specifically tasked the regulator with auditing capacity payments, energy payments, and the legality of contract extensions granted to these private power generators. Lawmakers expressed serious concerns regarding alleged over-invoicing and the lack of a rigorous mechanism to verify whether the actual generation capacity of these plants matches what is being billed to the state.
For the average consumer, this Nepra probe into IPP capacity payments represents a critical attempt to identify where the system is leaking funds. In Pakistan’s energy sector, the distinction between what is paid for the “availability” of a plant and what is paid for the “electricity” it actually produces has become a flashpoint for economic instability and rising tariffs.
Decoding the cost of power: Capacity vs. Energy
To understand why this probe is necessary, We see essential to look at how IPPs are compensated. Most contracts in Pakistan include two distinct payment streams: capacity payments and energy payments. While energy payments are variable and based on the actual kilowatt-hours delivered to the grid, capacity payments are fixed costs paid to the producer to ensure the plant is available to generate power, regardless of whether the government actually calls upon that energy.
Critics and parliamentarians have long argued that the state is paying billions for “idle” capacity—plants that are ready to run but are not needed because of low demand or inefficient grid infrastructure. This mismatch is a primary driver of the country’s circular debt, a systemic financial gap where power distributors cannot recover enough from consumers to pay the generators.
| Payment Type | What it Covers | Payment Trigger |
|---|---|---|
| Capacity Payment | Debt servicing, fixed O&M, and return on investment. | Plant availability (Ready to run). |
| Energy Payment | Fuel costs and variable operating expenses. | Actual electricity generated and sold. |
The committee is now demanding a detailed comparative report to determine if these payments have been inflated or if contract extensions were granted beyond agreed timelines without proper justification. By scrutinizing the National Electric Power Regulatory Authority‘s oversight, the Senate aims to uncover whether the regulator has been sufficiently rigorous in its periodic verification of generation capacity.
Broader governance and accountability concerns
While the energy crisis dominated the agenda, the committee’s meeting also highlighted systemic friction within the federal bureaucracy. A significant portion of the discussion centered on reports that the government intended to appoint Principal Accounting Officers (PAOs) from the private sector. Under the current constitutional framework, PAOs are the primary custodians of financial discipline and public accountability within ministries.
The Secretary of the Establishment Division informed the committee that no such private-sector appointments had been made. However, the committee noted that advertisements suggesting otherwise had been issued. The panel issued a strong recommendation against any such appointments that would violate existing laws, viewing the role of PAO as a critical safeguard against the misuse of public funds.
The meeting further touched upon the conduct of the Oil and Gas Regulatory Authority (OGRA). The committee reviewed a specific consumer complaint involving Sui Northern Gas Pipelines Limited, where a domestic user was issued an excessive bill totaling Rs700,000. The committee questioned OGRA’s handling of the appeal and directed the Secretary of the Establishment Division to personally ensure the matter is resolved, signaling a push for better consumer protection in the utility sector.
Transparency in civil service and administration
The session also pivoted to the integrity of the Civil Service Examination (CSS), reflecting a broader concern over institutional transparency. Members of the committee raised questions about the high failure rates of candidates and social media allegations regarding unusually high interview marks awarded to recent toppers.
While a representative from the Federal Public Service Commission (FPSC) stated that detailed marks are only disclosed to the individual candidates, the committee was not satisfied with this level of opacity. The relevant authorities have been directed to submit a detailed written reply and complete results during the next meeting to clear the air regarding the selection process.
Other administrative delays were also addressed, including a prolonged holdup in the approval of 11 kV vacuum circuit breakers. NEPRA indicated that a decision on this matter is expected by the end of the current month, though the committee has deferred further discussion until all relevant stakeholders can be present.
Disclaimer: This report covers regulatory and financial proceedings and is intended for informational purposes only. It does not constitute financial or legal advice.
The next major milestone in this investigation will be the submission of NEPRA’s comparative report on IPP performance and payments. This document is expected to reveal whether the state has been overpaying for power and will likely form the basis for future renegotiations of power purchase agreements. The committee is scheduled to reconvene to review these findings and the FPSC’s detailed results.
Do you think renegotiating IPP contracts is the key to lowering electricity bills, or is the problem deeper in the grid? Share your thoughts in the comments below.
