Independent Power Producers (IPPs) in Pakistan were paid over Rs. 979 billion in capacity charges during the fiscal year 2023-24, according to a report submitted by the Power Division to the National Assembly.

The report details that from July 2023 to June 2024, a total of Rs. 979.29 billion was disbursed to 33 IPPs as capacity payments. Of this substantial amount, Rs. 718 billion was allocated to eight IPPs that generate electricity using local and imported coal.

Additionally, Rs. 72.63 billion was paid to 11 IPPs utilizing local gas and LNG, while three hydropower-based IPPs received more than Rs. 106 billion. Furthermore, 11 IPPs producing electricity from furnace oil were compensated with over Rs. 81.60 billion.

The federal government is currently renegotiating contracts with these IPPs to reduce electricity rates nationwide. Energy Minister Awais Leghari stated last week that the existing power pricing structure is unsustainable, and both the government and IPPs agree that maintaining the status quo is not an option.

These negotiations are part of broader efforts to restructure the power sector and address the financial challenges facing the energy industry in Pakistan.