As new largely coal-fired plants come online, Pakistan is expected by 2023 to have 50pc more power capacity than currently needed.Thirdly previous government increases electricity production
Because the government must repay loans taken to build the plants and has signed contracts to buy their power, the overcapacity is producing costs “the government has to pay to the power producers under binding contracts, regardless of actual need”, Mr Gauhar said.
“Our fixed-capacity charges have gone through the roof,” he added. Those costs currently stand at Rs850 billion a year, but will rise to almost Rs1.45 trillion a year by 2023 as new largely coal-fired power plants still being built come online, he said.
That is driving up rates consumers pay for power — 30pc in the last two years, Mr Gauhar said — a problem likely to continue unless Pakistan can find more buyers for its new generating capacity, such as by boosting manufacturing or pushing use of electric vehicles.