ISLAMABAD: Pakistan paid a staggering Rs2.94 trillion for electricity in FY2024-25, with more than 61 percent of the amount consumed by fixed capacity payments to power plants operating at barely 42.5 percent utilisation. A new Performance Evaluation Report by Nepra lays bare structural inefficiencies that continue to inflate tariffs and burden public finances.

The report reveals that thermal plants ran at an average 42.5 percent capacity, while renewable facilities operated at just 36.6 percent despite persistent complaints of high electricity prices. Of the total power purchase price, Rs14.3 per unit represented Capacity Purchase Price compared to Rs9.0 per unit for actual energy costs, underscoring the weight of take or pay contracts.

Heavy reliance on imported RLNG, furnace oil and coal further escalated generation costs. Part Load Adjustment Charges triggered by underutilisation added Rs44.6 billion, while renewable curtailments led to over Rs13 billion in Non Project Missed Volume payments.

K Electric performance reflects similar distortions. Its system operated at 34.6 percent utilisation and remained dependent on imported fuels despite a long delayed grid interconnection enabling up to 2000 megawatts of imports. Take or pay RLNG commitments continue to constrain cost savings.

Ironically, some of the cheapest plants including Uch and Thar coal units operated below optimal levels. Thar plants averaged 72.9 percent utilisation, while transmission bottlenecks limited dispatch of low cost southern generation to demand centres in the north.

Nepra warning is unequivocal. Without aligning capacity expansion with demand growth, reforming rigid contracts and prioritising indigenous fuels, Pakistan risks entrenching a high cost power structure that undermines industrial competitiveness and deepens fiscal stress.