ISLAMABAD: Pakistan’s power regulator is warning that weak electricity demand, rising rooftop solar use and excess generation capacity could leave consumers paying for power they do not need, as officials push for a more transparent plan to match future electricity projects with actual demand.
National Electric Power Regulatory Authority Chairman Waseem Mukhtar raised the concerns in an additional note on the Integrated System Plan 2025-35, which was approved by the regulator envisaging $47.13 billion in new power generation projects to meet rising electricity requirements over the next decade.
Of the total planned capacity, 17,485 MW will come from projects that have already been allocated, while another 8,560 MW will be added through newly optimized capacity. Meanwhile, about 2,577 MW of existing generation capacity is expected to be retired.
The long-term expansion plan also includes an estimated $10.65 billion investment to upgrade and expand the transmission system.
Waseem Mukhtar questioned major power-sector institutions, including the Independent System and Market Operator, distribution companies and the Central Power Purchasing Agency-Guarantee, over major differences in their electricity demand forecasts.
Mukhtar said the differences could make it difficult to determine how much new generation capacity Pakistan actually needs and when it should be added. He also warned that Pakistan's power sector continues to struggle with excess generation capacity.
The problem has increased the amount consumers pay through capacity charges, even as electricity sales and the use of power plants decline. The falling demand has created a growing financial problem for the power sector.
As fewer units of electricity are sold, fixed capacity costs are spread across a smaller amount of electricity, pushing up the cost per unit. Higher grid electricity prices are also encouraging consumers to look for cheaper alternatives, particularly rooftop solar.
Many consumers are increasingly keeping their grid connections mainly as a backup while meeting more of their electricity needs through alternative sources. Mukhtar described the situation as a cycle that could further weaken the national power system. Lower demand reduces the use of existing generation capacity, which raises capacity costs per unit.
Higher electricity prices then encourage more consumers to move away from the grid, further reducing demand. “This cycle is adversely affecting affordability, efficiency and long-term sustainability of the power sector,” Mukhtar said.
During a recent hearing on the monthly fuel charges adjustment, the Independent System and Market Operator said electricity demand during daylight hours had fallen to about 12,000 megawatts. Mukhtar said the figure was broadly in line with electricity produced by plants that must continue operating.
The chairman said Pakistan needs coordinated steps to bring down the cost of grid electricity and make it competitive with alternative energy sources. Lower electricity costs, he said, would encourage consumers to stay connected to the national grid and make greater use of it.
Mukhtar also pointed to Pakistan's transmission system as another major problem. Limited transmission capacity can prevent cheaper electricity from reaching areas with high demand, forcing the system to rely on more expensive available power.
He called for priority action on transmission projects that can move lower-cost electricity to major load centers. At the same time, he warned that new transmission investments must be carefully matched with current and expected electricity demand. Otherwise, Pakistan could end up with expensive infrastructure that is underused or becomes stranded. Mukhtar said the Integrated System Plan should serve as a complete roadmap for expanding both generation and transmission capacity.
Including the potential effect on consumer tariffs would allow policymakers and regulators to make better decisions and support more financially sustainable power planning, he said. Mukhtar also questioned how some power projects previously classified as “committed” were being handled.
He said the Council of Common Interests had established assumptions and criteria for committed projects in 2021. Since then, however, Pakistan's electricity market has changed significantly, particularly because of the rapid growth of rooftop solar and slowed electricity demand. He said Pakistan now needs a clear and transparent system to determine whether upcoming generation projects are still necessary based on current and expected demand.
The regulator's concerns highlight the growing pressure on policymakers to avoid adding unnecessary power projects while ensuring that cheaper electricity can reach consumers and the national grid remains financially sustainable.
