Pakistan IPP Closures: Cutting Inefficient Power Plants
First Phase Targets Five Major IPPs
The government is advancing energy sector reforms. Prime Minister Shehbaz Sharif leads this effort. A special task force initiated negotiations. This led to the planned closure of five IPPs. These plants have a combined capacity of 2400 MW. This first phase aims to ease national economic burden.
The Five IPPs Scheduled for Shutdown
Sources confirmed the list of plants for closure. The Hub Power Company (Hubco) is the largest. Its capacity exceeds 1200 megawatts. The AES Lal Pir plant will also be closed. Its total capacity is 362 megawatts.
Other power plants are also on the list. Atlas Power generates 224 megawatts. Saba Power adds 136 megawatts to the system. The 450-megawatt Rousch Power Plant will also cease operations.
Reducing Capacity Payment Burden
The decision targets older, less efficient IPPs. Many signed contracts decades ago. At that time, Pakistan faced severe energy shortages. The energy landscape has since changed significantly. New, more efficient plants are now online. The focus is shifting to solar and wind power.
Eradicating Circular Debt
Closing these IPPs will reduce payments. The government makes capacity payments to IPPs. These payments are due even if electricity is unused. This system fueled Pakistan’s circular debt crisis. Eliminating these older plants will cut these costs. This is key to managing the nation’s electricity supply.
Paving the Way for Sustainable Energy
Contract termination approval is now sought. The federal cabinet will give final approval soon. The Pakistan IPP Closures mark a major milestone. This reform addresses Pakistan’s most pressing economic issue. It moves the country towards a sustainable energy mix. Further IPP closures may follow this initial phase. This is a step towards a cost-effective future.