Pakistan Approves 10-Year Power Generation Expansion Plan

Prime Minister Shehbaz Sharif has given the green light to Pakistan’s highly anticipated ten-year Indicative Generation Capacity Expansion Plan (IGCEP 2025–35). This initiative is projected to yield savings of $17 billion by strategically rescheduling and eliminating projects totaling 7,967 MW.

However, the renewable energy projects (solar, wind, and hybrid) proposed by K-Electric (KE) were not incorporated into the IGCEP 2025–35. Instead, KE has been directed to establish its own dedicated grid connection to draw electricity from the National Grid.

An official, speaking anonymously, stated, “Thar and nuclear power generation facilities are situated near KE’s infrastructure, enabling KE to utilize these resources to fulfill its energy requirements. Our actions have been impartial and fair to all parties involved.”

The primary goal of the plan is to guarantee that the public receives electricity at an affordable price and with a dependable supply. New projects were selected based on the criterion of minimizing costs. The anticipated reduction in the national economic burden is Rs 474.3 billion, and the rescheduling of project timelines has resulted in national savings of $10 billion (Rs 2,790 billion).

The government reports that eliminating 7,967 MW of planned projects resulted in additional savings of $7 billion (Rs 1,953 billion). These revisions are also expected to lower electricity costs, with projected average savings exceeding Rs 2 per unit. Government representatives assert that, for the first time, electricity projects have been chosen solely on the basis of merit and complete openness. The strategy gives priority to national interests above particular or political interests by canceling costly and unnecessary projects.

The initial IGCEP proposed 14,984 MW of new projects. This has now been reduced to 18 projects totaling 7,017 MW, which include the Dasu and Mohmand dams. Priority has been granted to 7,987 MW of projects that utilize domestic resources, such as hydro, solar, nuclear, and wind power, so reducing reliance on imported fuels such as coal and gas. This action is anticipated to save billions of dollars in foreign exchange each year.

Future power projects will be awarded through competitive bidding, emphasizing involvement from the private sector. The government will discontinue purchasing excess electricity, offering sovereign guarantees for new projects, and levying capacity fees on unused generation. According to official sources, “This IGCEP will ensure a reliable, affordable, and merit-based electricity supply, which will ultimately lower prices and benefit the nation.”

They further stated that strategic projects may be approved if their additional costs (Least Cost Violation or LCV) are determined and paid for by the sponsoring organization. For instance, Chashma-5 (C-5) was assessed using the LCV methodology and selected with an LCV of $0.079 billion in FY 2032. It was later optimized for commissioning in FY 2038 without incurring any LCV charges. According to the National Electricity Plan 2023–27, LCV expenses will only be applicable for the first six years of operation (FY 2032–37), totaling Rs 14 billion (including financing costs), payable in 12 semi-annual installments of Rs 1.17 billion each.

Sources confirmed that the IGCEP will be continuously improved before its final submission to NEPRA, and that savings and LCV calculations will be further reviewed and stakeholder input considered.

The System Operator (NPCC) submitted the draft IGCEP to NEPRA in April 2024. The plan faced intense examination as a result of shifting sectoral dynamics, such as falling electricity demand, rising net metering adoption, and a backlog of committed capacity additions, which raised concerns about the potential financial impact on consumers.

The draft IGCEP 2024–34 included 25,973 MW of new capacity, with 25,573 MW (98.5%) categorized as committed and only 400 MW (1.5%) available for optimization. The plan had a Net Present Value (NPV) of $64.30 billion, comprising $42.61 billion in fixed costs and $21.69 billion in generation costs.

Given the significant reliance on committed projects and falling demand, a comprehensive assessment of the committed capacity criteria was performed. Of the 73 projects originally classified as committed in the IGCEP 2021–31 (totaling 22,418 MW), 7,434 MW had been put into service by the end of 2024. Based on revised criteria, the remaining 14,984 MW were reassessed, taking into account the following factors: (i) for private power producers: achieving financial close, and (ii) for public projects: (a) securing financial commitments, (b) construction progress exceeding 10%, and (c) financial progress exceeding 10%.