A.    BACKGROUND

1.   This refers to the Important PG QCs in trail, blue, italic and after double line (a) 157 of 3.3.25 about Electricity Bills significantly reduction claimed & KCV (b) 155 of 27.2.25 about Government saved Rs 1.1 Trillion & Action for Bills reduction

2.   We also refer to several Other QCs including (a) 138 of 16.11.24 about New Financial Model proposed for IPPs Capacity payments cut (b) 129 of 18.10.24 about Five + 18 Power Companies Agreement Termination & Jamaat, etc. efforts for U (c) 118 of 30.8.24 about KE FCA Bomb of Rs 37.75 for May-June 2024 per NEPRA order in upcoming bill and Jamaat –e-Islamic

B.    UPDATED COMMENTARY

Further to KQU 3496 dated 4.8.25, being an important matter, we would inform you about Pakistan Power Sector Review for the FY 2024-2025 (Attachment 177.1) by Mr Ahmed Tariq Bhatti in the ensuing paragraph, with emphasis in bold & Underline for quick reading.

Pakistan’s electricity sector stands at a critical crossroads in 2025 — solar energy and hydropower are growing, but structural flaws, circular debt, and ageing infrastructure are pulling it backward.

I.   POWER CAPACITY VS DEMAND

1.     Total Installed Power Capacity: 46.2 GW

2.     Dependable Capacity: 41 GW

3.     Peak Power Demand (2025): 30.8 GW

4.     Weak national grid can’t carry a load of more than 25 GW. Therefore, the additional power capacity installation is useless unless the capacity of national grid is enhanced to 45+ GW.

5.     Electricity generated cannot be stored, it needs to be released to the national grid, that is why, we need to expand the capacity of the national grid to dispatch the electricity generated at or near full capacity to meet the demand.

6.     56% electricity is generated from fossil fuels (coal, gas, oil) that are mostly imported and generate electricity at much higher cost when compared to water or other renewable sources of energy.

7.     New solar plants and rooftop boom

8.     Grid instability + under-utilised assets raise concern

II.   HYDROPOWER – THE BACKBONE OF CLEAN ENERGY

1.     Total Hydropower Potential: 59.8 GW

2.     Viable for Development: 41+ GW

3.     Currently Utilized: 10.6 GW

4.     Utilization: 25%

5.     Delays in hydropower projects are due to red tape and  mismanagement.

6.     Winter shortfalls and delayed dam projects break consistency in  generating power.

7.     SOLAR ENERGY – A SUCCESS  STORY OF 2024-25

8.     PV Panel Imports: 16 GW (+227%)

9.     Rooftop Solar via Net Metering: 4.9 GW

10.  But it contributes only 1% to grid power

11.  It lacks smart integration in the  national grid

III.   WIND & SOLAR COMBINED = ONLY 4% OUTPUT

1.     Still far below the potential

2.     Ideal zones: Thar Desert, coastal Sindh, Balochistan

IV.   DEMAND DECREASES & LOSSES GROW

1.     Power Sales Decreased by: 2.8%

2.     Industrial and Agricultural Usage Decreased

3.     Distribution Losses: 6.5% above allowed limit

4.     Total Financial Losses from billing issues: PKR 588 Billion

5.     Total Circular Debt: PKR 2.4 Trillion (~2.3% of GDP)

6.     This circular debt—largely driven by capacity payments to idle or inefficient plants—is eventually passed on to consumers in the form of higher electricity bills.

7.     Revising these costly contracts, reducing fixed payments, and moving toward a merit-based, transparent procurement system that could dramatically reduce this burden—especially for the poor and lower middle class.

V.   CAPACITY PAYMENTS –A SILENT KILLER

1.     FY 2024-25 Payments: PKR 1.9 Trillion

2.     Many coal and nuclear plants are  operating below normal  capacity

3.     Fixed costs are paid to IPPs regardless of power generation

4.     Reforms here could free up hundreds of billions, stabilise tariffs, and help the poorest households in lowering their electricity bills

VI.   ESTABLISHING CPPA

The CPPA was established to promote transparency and competition in the electricity market, with the system scheduled to become operational from January 2023. However, if its implementation is being hindered due to vested interests or undue influence from IPPs, it raises a serious question about the rationale behind investing in such an extensive and costly reform framework.

VII.   K-ELECTRIC – GAINS & LOSSES

1.     Sales Down: 3.8%

2.     Grid resilience improved: 1,130 MVA added

3.     Rooftop Solar: 333 MW

4.     But consumption still shrinking

VIII.   TRANSMISSION BOTTLENECKS

1.     Power congestion in 500kV lines from South to North

2.     PKR 56 Billion are lost in the inefficient dispatches of electricity during 2024-25

3.     Over Reliance on costly RLNG in North continues

IX.   KEY TAKEAWAYS

1.     Solar adoption is booming

2.     Hydropower leads clean energy mix

3.     Grid and governance issues persist

4.     Transmission remains weak that contributes to high transmission losses. These inordinately high transmission losses exert pressure on consumer bills. We have the highest transmission losses in the region.

5.     Circular debt crisis deepens — but is fixable

X.   THE WAY FORWARD

1.     Real sector-wide reforms, remove red tapes, mismanagement and corruption

2.     Accelerate hydel mega-projects

3.     Smarter solar-grid integration

4.     Transparent power contracts and procurement under the guidelines of the CPPA. Make CPPA an effective and efficient institution.

5.     Revise capacity payments to protect poor consumers

6.     Crack down on billing inefficiencies and electricity theft

7.     Expand grid capacity to handle 45+ GW

8.     Invest in run-of-river plants — low cost, fast build

9.     Halt new fossil fuel plants — renegotiate old IPP deals

XI.   CONCLUSION

1.     Pakistan’s energy future can be clean, reliable, and fair — but only if we fix the system today!

2.     Government must take serious steps for the advancement and growth of power sector by removing all bottlenecks.

C.   FURTHER DETAILS & SERVICES

Should you require any clarification or explanations in respect of the above or otherwise, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com.