ISLAMABAD: Pakistan’s power sector is facing mounting financial pressure as outstanding payments to Independent Power Producers have climbed to Rs1.2 trillion including nearly Rs500 billion owed to Chinese power companies. The disclosure was made during a public hearing conducted by the National Electric Power Regulatory Authority highlighting the growing liquidity crisis confronting the energy sector.
The hearing was chaired by Nepra Chairman Waseem Mukhtar and focused on the petition submitted by the Central Power Purchasing Agency Guarantee seeking approval of its market operator fee for the fiscal year 2025 26. Officials informed the regulator that delayed payments to power producers were worsening circular debt and undermining investor confidence particularly among foreign stakeholders.
According to the petition CPPA G has sought revenue requirements of Rs2.887 billion excluding prior year adjustments while the figure rises to Rs4.664 billion when past adjustments are included. The request reflects increased operational costs and administrative pressures faced by the power purchasing entity amid broader sectoral challenges.
Officials told the regulator that CPPA G general establishment expenses are projected at Rs2.225 billion marking an increase of nearly eleven percent compared to the previous fiscal year. Salaries and employee benefits are expected to rise sharply by seventeen percent reaching Rs2.175 billion due to inflationary pressures and cost of living adjustments.
Pay and allowances are proposed at Rs1.627 billion showing a three percent increase despite a reduced workforce following the transfer of staff to the Independent System and Market Operator and multiple resignations during the last year. Administrative expenses are also projected to rise to Rs322 million reflecting a seven percent increase year on year.
Nepra concluded the hearing after reviewing the financial projections and has reserved its judgment. Energy sector analysts warn that without urgent reforms and timely settlement of IPP dues the financial stress could disrupt power supply planning discourage future investment and deepen Pakistan’s circular debt problem further impacting economic stability.
