Pakistan PM calls for shutting down outdated power plants with higher fuel consumption

This picture taken on May 23, 2018 shows a general view of a Chinese-backed power plant under construction in Islamkot in the desert in the Tharparkar district of Pakistan's southern Sindh province. (AFP/File)

• Pakistan produces expensive electricity due to outdated infrastructure, reliance on imported fuel, and substantial transmission losses
• PM Shehbaz Sharif calls for expediting implementation of ongoing reforms and modernization of the country’s power transmission system

ISLAMABAD: Prime Minister Shehbaz Sharif on Friday called for shutting down inefficient and outdated power plants that produced less power with higher fuel consumption, Pakistani state media reported.
Pakistan produces expensive electricity due to a combination of factors, including outdated infrastructure and inadequate power plants, reliance on imported fossil fuels, inefficient energy mix, substantial transmission and distribution losses, and chronic issues like circular debt and regulatory inefficiencies.
Additionally, fluctuations in foreign exchange rates and complex tariff structures contribute to higher electricity prices, while underutilization of domestic resources such as hydropower and coal add to the problem. High power cost is one of the key factors that leads to inflation in the South Asian country.
On Friday, Sharif presided over a meeting in Islamabad to evaluate and discuss future plans for power generation in the country and said only low-cost power projects should be prioritized in the future, the Radio Pakistan broadcaster reported.
“The closure of such [outdated] power plants will not only save valuable foreign exchange spent on fuel imports, but also reduce the cost of electricity for consumers,” he was quoted as saying.
The prime minister called for expediting implementation of ongoing reforms and instructed officials to modernize the power transmission system as per international standards, according to the report.
In October, Sharif said his government was terminating purchase agreements with five independent power producers (IPPs) to rein in electricity tariffs as households and businesses buckled under soaring energy costs.
The need to revisit power deals was part of reforms for a critical staff-level pact in July with the International Monetary Fund (IMF) for a $7-billion bailout. The program was approved in September.
Pakistan has also begun talks to reprofile power sector debt owed to China and structural reforms, but progress has been slow. It has also promised to stop power sector subsidies.