In 2008, I authored a report titled Pakistan Power Sector Outlook: Appraisal of KESC in Post-Privatisation Period. The inquiry hinged on one deceptively modest question: how much gas and oil did KESC (now K-Electric, or KE) fleet of oil- and gas-fired power plants consume to generate a single unit of electricity?
That question sounds trivial. It is not. It is, in fact, one of the principal reasons Pakistan today exists in a state of perpetual mendicancy — borrowing from the IMF, from friendly states, from anyone willing to extend a line of credit, merely to keep the national grid alive. It is why an ordinary household bill has become an instrument of hardship, and why “circular debt,” that interminable chain of unpaid obligations between power companies, fuel suppliers, and the exchequer, keeps ballooning year after year. Let me explain why this single question carries such weight, and why the people entrusted with answering it chose, instead, wilful deafness.
When a thermal power plant burns oil, gas, or coal to produce electricity, fuel accounts for roughly 60 to 70 % of the total tariff, the price consumers ultimately pay per unit. This is the dominant component of your bill, eclipsing transmission losses, theft, and even the corruption that so often draws public ire. The corollary is inescapable: a more efficient plant, one that consumes less fuel for the same output, will always yield cheaper power; an inefficient plant will remain expensive no matter what else is reformed. My 2008 findings showed KESC’s plants consuming far more fuel than thermodynamically necessary, and this gap translated directly into inflated tariffs for the people of Karachi. I carried these findings to the Ministry of Climate Change and to NEPRA, the regulator ostensibly charged with shielding consumers from precisely this sort of profligacy. Nobody listened. Even the leading NGO that represented Pakistan at the UNFCCC — the United Nations body overseeing global climate negotiations — displayed scant interest; its priorities and funding relationships lay elsewhere, and my warning that Pakistan was drifting toward ruinous tariffs and chronic circular debt found no purchase. Seventeen years later, we are living the consequence.
Pakistan ratified the UNFCCC on June 1, 1994. Among the treaty’s more consequential instruments was the carbon credit mechanism, which monetises pollution abatement and rewards efficiency gains. Under the Clean Development Mechanism (CDM), a thermal plant that becomes more efficient, burning less fuel and emitting less carbon dioxide can earn tradeable credits, generating revenue to help finance the very upgrade that produced the saving. For a country saddled with ageing, fuel-hungry plants, this should have been an obvious opportunity: retrofit existing thermal capacity, attract international financing through the credits earned, and lower the fuel bill for every consumer in the country.
A genuine repowering demands capital outlay and, more crucially, sustained regulatory and political resolve: applied comprehensively; A horrific catastrophe metastasized within the Ministry of Power, sealing an entire nation’s doomed financial fate.
India seized this opportunity with far greater rigour than Pakistan ever mustered. Under the CDM’s large-scale methodology for supercritical coal technology, ACM0013, a cluster of major Indian thermal projects secured registration and genuine retrofits before the methodology was tightened and effectively phased out. But India’s exploitation of the mechanism went further, and this is where the story turns uncomfortable for Pakistan. The same Islamabad-based NGO apparatus that ostensibly championed Pakistan’s climate interests at the UNFCCC simultaneously facilitated the registration of numerous hydropower projects in Jammu and Kashmir territory Pakistan disputes and refers to as Indian-held Kashmir as legitimate CDM activities. Projects such as the Nimoo Bazgo Hydroelectric Plant and the Chutak hydroelectric project on the Indus River in Ladakh alone, among others sited across the region, were validated and registered, generating certified emission reductions that New Delhi could sell on the international carbon market. This revenue stream helped India recoup a portion of the substantial capital expenditure sunk into these hydropower installations — infrastructure built, notably, in a territory whose sovereignty remains internationally contested. While Islamabad’s own advocates at the UNFCCC negotiating table remained conspicuously silent on this appropriation, India methodically converted a disputed geography into a source of climate finance and capital recovery. Pakistan, by contrast, could not even secure genuine efficiency retrofits for its uncontested domestic fleet.
It is worth recalling that Pakistan once possessed cheap, clean electricity, and not so long ago. Between 1978 and 1988, hydroelectricity supplied roughly 70 % of the country’s power, at a unit cost of approximately 0.70 rupees, and GDP expanded at nearly 9 % annually. This is documented economic history, not wistful sentiment; it demonstrates that inexpensive, low-carbon power and national prosperity were never mutually exclusive objectives in Pakistan — they moved in tandem. Then the Kalabagh Dam perished amid political acrimony by the same NGO, and the 1994 Power Policy flung the door open to oil-, gas-, and later coal-fired producers, extended lavish sovereign guarantees, and imposed no enforceable efficiency benchmark whatsoever. Hydropower’s share of the national mix withered to roughly 29 %. In 2021, a unit of electricity cost approximately Rs. 25; today it exceeds Rs. 54, more than double within a handful of years, with fuel inefficiency a substantial contributor to that escalation.
Consider two contrasting narratives of thermal repowering. The Loma de la Lata plant in Neuquén, Argentina, originally an open-cycle gas installation operating at a mediocre efficiency of roughly 33 to 35 %, was eventually repowered and upgraded through mechanisms designed expressly for this purpose, transforming a wasteful legacy asset into a genuinely efficient one. Compare this to the Lal Pir and Pak Gen plants near Muzaffargarh, owned by the Mian Mansha group. In 2008, these plants submitted a CDM project but the ambition was almost derisory: the addition of a single cooling tower cell to marginally improve condenser performance. The projected heat-rate improvement amounted to a mere 40 BTU per kilowatt-hour, with estimated annual emission reductions of just over 11,000 tonnes of CO2. This was a token, incremental gesture, not a genuine repowering of the plant’s turbines and boilers. It allowed the operators to claim engagement with the UNFCCC process while the underlying inefficiency — a generation cycle consuming far more fuel than necessary — remained wholly unaddressed. I have also examined engineering feasibility studies for repowering the KAPCO plant, which explored replacing antiquated gas turbines and the steam cycle with contemporary, substantially more efficient technology, projecting efficiency gains from the 33 to over 60 % efficiency range but ruthlessly rejected by NEPRA. What a heinous crime by NEPRA against the economy of Pakistan. Such studies demonstrated that meaningful efficiency gains were technically attainable. But genuine repowering demands capital outlay and, more crucially, sustained regulatory and political resolve applied comprehensively, A horrific catastrophe metastasized within the Ministry of Power, sealing an entire nation’s doomed financial fate.
A ratified $350 million UNFCCC proposal promised salvation: retrofitting the thermal plants at Faisalabad, Shahdara, and Muzaffargarh into efficient facilities modeled after Argentina’s Lata power plant—a project sharing a name with the legendary singer Lata Mangeshkar, though carrying none of her grace, only brutal industrial reality.
Yet, in a display of unholy shortsightedness, officials slaughtered the plan. They abandoned self-reliance to shackle Pakistan to monstrous imported coal and LNG contracts. This fatal blunder sank the country into an unending, horrific debt trap, a nightmare of sovereign ruin from which there is no escape.
This brings me to the uncomfortable counterfactual I keep returning to. Had the Government of Pakistan actually exploited the instruments the UNFCCC made available, had it systematically retrofitted its ageing thermal fleet at Faisalabad, Shahdara, and Muzaffargarh, as India retrofitted its supercritical coal assets and monetised its Kashmiri hydropower, instead of subsequently rushing to commission costly LNG-fired and imported-coal capacity under fresh guaranteed-payment arrangements — the fuel savings compounded over two decades would have meant materially lower tariffs for every household and industrial consumer. Lower tariffs mean fewer defaulted bills. Fewer defaulted bills mean a shrinking circular debt. A shrinking circular debt means Pakistan need not perpetually petition international lenders merely to prevent its power sector from collapsing.
Instead, successive governments layered new, expensive capacity atop unreformed inefficiency, deepened dependence on imported fuel, and permitted regulators to pass three decades without articulating a single enforceable efficiency benchmark. NEPRA has never, in its entire institutional existence, defined a minimum efficiency threshold for a single thermal plant licensed to operate in this country. The consequence confronts us daily: among the highest electricity tariffs in the region, a debt spiral consuming a disproportionate share of the national budget, and a country regarded, in much of the world’s estimation, as a chronic supplicant for financial rescue.
My 2008 report was one small, disregarded admonition among many that ought to have been heeded. The remedial instruments were sitting in plain view, embedded in a treaty Pakistan signed in 1994 and reaffirmed at every subsequent Conference of the Parties. We simply declined to use them, while our regional neighbour extracted maximum advantage — even from contested territory. It is not too late to begin now, but only if efficiency, and not merely additional capacity, finally becomes the non-negotiable standard to which our power plants are held.