IPPs and Red Tape: The Two Critical Factors Hindering Pakistan’s Growth
Looking at the vast and rather chaotic picture of Pakistan’s energy sector, one must admit that the potential to achieve real efficiency and focus on sustainability has not yet been identified. This potential is best achieved by readjusting the payment system for power providers, especially Independent Power Producers (IPPs), from a capacity-based to a performance-based system. Therefore, how this article presents performance-improvement advice from within the sector indicates that improvement can directly lead to a corresponding increase in capacity and, specifically, to the stability of the entire country’s energy supply. In essence, one can locate the main source of the energy crisis in Pakistan in the outdated structure of the contracts signed with IPPs. Apart from this, the provided contracts had been based more on the capacity that IPPs contracted to deliver, as opposed to the amount of electricity actually produced. This frequently results in conditions where the costs of ...
