The IPP System Did Not Save Pakistan. It Destroyed It.
My position on Pakistan's electricity crisis after looking at the evidence
By Asad Baig · Lahore · April 2026 · Approx. 18-min read
Why I am writing this
My name is Asad Baig.
I am not an economist. I am not a journalist. I am not a politician, an industry insider, or a government adviser. I am a Pakistani citizen who pays an electricity bill every month, like you do. And one day I started asking questions.
I asked: where does this money go? Why does my bill keep rising? Why did the printing press near my house close down? Why is my friend in Faisalabad, whose family ran a textile unit for thirty years, now driving a Careem in Lahore?
The answers I found shocked me. Not because they were hidden. They were not. The information was sitting in newspaper archives, in government reports, in court documents. The shock was that nobody had bothered to put it in one place where ordinary Pakistanis could understand it.
So I did. I wrote a book called The People's Bill. I wrote a companion document called My Position. And I am writing this article because the people who pay for the IPP system have a right to know, in plain language, what I have come to believe about it, and why.
This is not a neutral piece. I will not pretend it is. I am angry on behalf of every Pakistani who has been lied to for thirty years about why electricity costs so much. But I have tried to be fair. I have tried to understand the constraints the people in power faced. I have tried to see the choices they had.
Even after seeing all of that, what they did was wrong. And we have a right to know.
The number that should make you angry
Two trillion rupees.
Try to imagine that. It is hard, because the number is too big to feel real. Let me put it in things you can picture.
Two trillion rupees is more than Pakistan's entire defence budget. It is more than what we spend on health and education combined. It is enough to give every Pakistani citizen, every man, woman, child, every grandmother in a village, every newborn in a hospital, about eight thousand five hundred rupees a year, in cash, no questions asked.
That is the amount we pay every single year to power plant owners. Not for the electricity they produce. For the privilege of having their power plants exist.
Read that line again. I want it to sit with you for a moment.
We do not pay this money because we are receiving electricity from these plants. We pay it whether we receive electricity or not. We pay it whether the plants run or sit idle. We pay it whether we need the power or have a surplus. The contracts say we must pay it. So we pay it.
In the financial year 2023-24, two specific power plants in Pakistan, HUBCO and KAPCO, received forty-six billion rupees from the Pakistani government. In that same year, those two plants produced exactly zero units of electricity. Not low production. Zero. They sat there. We paid them.
Forty-one other plants in Pakistan operated at four to twenty-five percent of their capacity that year. They produced very little. They received their full capacity payment anyway.
If you find this hard to believe, I understand. I found it hard to believe too. But every number I have given you is documented. The forty-six billion to HUBCO and KAPCO was confirmed publicly by Gohar Ejaz, the former federal minister, in July 2024. He showed the data on television. Nobody disputed it. Because nobody could.
WHAT THIS MEANS FOR YOU
Every hundred rupees you pay on your electricity bill, about forty rupees go to capacity payments. Twenty-five go to fuel. Twenty go to losses and theft. Fifteen go to taxes and operations. The largest single component of your bill is not for electricity at all. It is for the existence of plants you may not use.
If we removed capacity payments tomorrow, if we converted all our power contracts to the simple rule "pay only for what you receive", the price of electricity in Pakistan would fall by approximately sixty percent. From around forty-eight rupees a unit to about nineteen.
Sixty percent.
Your bill of fifty thousand rupees a month would become twenty thousand. Your friend's textile factory could run again. The kiryana store owner could afford to keep his lights on through the evening. Your own savings would stop bleeding out every month into the bank accounts of forty families and a few foreign investors.
All it would take is the cancellation of one contractual provision.
Why do we not cancel it?
Because the same families who benefit from it are also the families who run the country, fund the political parties, own the media, and sit on every committee that has been set up over the past thirty years to "review" the situation.
That is what I am writing about.
The government is wrong to discourage solar
When I first started looking at this issue, the trigger was the news that the government was changing the rules on net metering and adding licensing requirements for small solar systems. My immediate reaction was that this was wrong. After weeks of looking at the question from every angle, I still believe it is wrong.
Six million Pakistani households went solar with their own money. They borrowed from family. They sold gold. They liquidated savings. They did this not because they wanted to make a political statement, and not because they were trying to harm the grid. They did it because the electricity bills had become unaffordable, and they were trying to survive.
The government's response, cutting the buyback rate to eleven rupees per unit, requiring NEPRA licenses for systems even under twenty-five kilowatts, adding fees, punishes the most financially responsible citizens in the country. The people who used their own resources to solve a problem the state had created.
I understand the government's logic. The grid needs revenue. The IPP capacity payments are fixed. If too many people leave the grid, the system collapses. I have spent enough time on this question now to understand why the rules were tightened.
But understanding the logic does not make the policy right. The right response to a financial collapse caused by bad contracts is to fix the contracts. Not to punish the citizens trying to escape the consequences of those contracts. The 2026 rules are the wrong solution to a real problem. They are choosing to maintain the obligations to forty families and Chinese state companies at the expense of the most diligent Pakistanis.
When I read the new prosumer regulations carefully, what I see is a government that has decided who matters and who does not. The contracts matter. The citizens do not. That is not a government acting in the public interest. That is a government acting to protect a class of beneficiaries.
WHAT THIS MEANS IN PRACTICE
If the government wants citizens back on the grid, it should make the grid more affordable by fixing the contracts that made it unaffordable. Not by closing off the alternatives. Solar should be a partner to the grid, not its enemy.
I do not accept the argument that there was no choice
Every time I asked why a particular bad decision was made, the answer involved some version of the same defence. There was load shedding. There was no money. There were no alternatives. Pakistan had to take the deal that was on the table.
After looking at this carefully, I do not accept that defence. Not for 1994. Not for 2002. Not for CPEC. Not for 2020. And not for the present.
There were always choices. The choices were difficult. Some involved short-term pain in exchange for long-term benefit. Some involved confronting powerful interests rather than accommodating them. Some required telling the public the truth instead of comfortable stories. But the choices existed.
In 1994, Pakistan could have insisted on competitive bidding instead of negotiated contracts. It could have capped dollar indexation. It could have used shorter contract terms. It could have invested the same effort in hydropower instead. Most of these options were considered and rejected, not because they were impossible, but because they were politically harder.
In 2013, Pakistan could have demanded better terms on CPEC. The country had real strategic value to China. The argument that "China would walk away" was always overstated. China needed Pakistan as much as Pakistan needed China. Better terms could have been negotiated. They were not.
In 2020, the inquiry report could have been published. The forensic audit could have been conducted. Imran Khan had the public mandate. He had the moral platform. He had a cabinet that voted to release the report. The choice to suppress it was a choice. There was no law forcing him to do it. He chose accommodation over accountability.
The "no choice" defence is a way of avoiding responsibility. It allows decision-makers to claim that the system forced their hand, when the truth is that they made specific decisions in specific moments, and they could have decided differently.
I want this on record: I do not believe the people who made these choices had no alternative. I believe they had alternatives, and they chose the option that benefited a small number of powerful people at the expense of ordinary citizens. That is the truth. The defences offered to obscure it should be rejected.
You cannot kill ten people to save a hundred
This is the moral position from which everything else in my view of this issue flows.
The defenders of the IPP system have, for thirty years, used a particular kind of argument. They have said: yes, these contracts are expensive. Yes, they hurt some people. But without them, the entire economy would have collapsed. We had to sacrifice some Pakistanis to save the rest.
I do not accept this calculation, and I never will.
Pakistani lives are not interchangeable units in a utilitarian equation. The seven hundred thousand textile workers who lost their jobs are not statistics whose suffering can be balanced against some hypothetical alternative scenario. The factory owner whose family business closed is not collateral damage. The middle-class family paying half their income on electricity is not an acceptable cost of doing business.
Every single person harmed by these decisions is a Pakistani citizen with the same rights as any other. The state's job is to protect them, not to sacrifice them so that abstract macroeconomic arguments can be honoured.
When I apply this principle to the IPP question, the conclusion becomes clear. Even if the contracts had genuinely saved some industry, which, as I will discuss next, they did not, the cost in human suffering paid by ordinary Pakistanis would not have been justified.
But the argument fails on its own terms. The contracts did not save industry. The contracts destroyed industry. The Bangladesh comparison shows it. The Faisalabad story shows it. The seven hundred thousand lost jobs show it. The argument that "we had to sacrifice some to save the rest" is not even true. We sacrificed everyone except the forty families.
The morality of governance is simple. You do not balance the suffering of ordinary citizens against the profits of a small elite. You protect the citizens. If the protection requires confronting the elite, you confront them. That is what governance is for.
"Pakistani lives are not interchangeable units in a utilitarian equation."
Anyone who tells you that ten thousand textile workers had to lose their jobs so that "the system" could survive should be asked one simple question: would your own family have been acceptable as part of those ten thousand? If not, then the calculation is not legitimate.
The contracts did not save industry, they killed it
The single most powerful argument the government has made for thirty years is that the IPP contracts saved Pakistani industry from collapse.
After looking at the evidence, I believe the opposite is true. The contracts killed Pakistani industry.
The proof is sitting in the export numbers. In 2000, Pakistan and Bangladesh had roughly equivalent textile exports, around five billion dollars each. By 2024, Bangladesh exported forty-seven billion dollars worth of textiles. Pakistan exported sixteen and a half billion. Bangladesh grew nine-fold. We grew three-fold. We were ahead. We are now far behind.
Bangladesh did not have the 1994 Power Policy. Bangladesh did not sign CPEC contracts at twenty-seven to thirty-four percent dollar returns. Bangladesh provided its industry with cheap, reliable electricity. The result is that Bangladesh now exports three times what we do in the sector that should have been our strength.
The proof is also in the closures. Over one hundred and eighty-seven textile mills shut down in Punjab. A thousand small and medium textile units shut in Faisalabad alone. Seven hundred thousand jobs lost in the sector that used to be the engine of our economy.
Faisalabad once called itself the Manchester of Pakistan. Today, the buildings of those closed factories still stand. The machines sit silent inside them. The owners cannot afford to operate them. The workers have moved to Lahore looking for construction jobs, or to the Gulf as migrant labour, or back to villages where their families try to find a way to feed them.
When industry leaders are asked what caused this collapse, they give a unanimous answer.
"Pakistan's electricity tariffs for industrial use are nearly double those in countries like Bangladesh, Vietnam, and India. Industries can be run at twenty-six rupees per unit. We are being charged thirty-eight to forty rupees per unit. Why do industrial units have to foot the bill for line losses, capacity charges, and theft?"
, Naveed Ahmed, Chairman, APTMA Southern Zone, February 2025
If the contracts had saved industry, we would not be looking at these numbers. The closures, the job losses, the export decline, these are the evidence that the policy did not work. It cannot work, because the structure of the contracts makes Pakistani electricity systematically more expensive than the electricity available to our competitors.
The defenders of the system continue to claim that without the IPPs, the situation would have been worse. This is a counterfactual argument that cannot be falsified. It is also, in my view, unconvincing. The actual outcome we observe, industrial collapse, mass unemployment, market share lost to neighbours, is what happened with the IPPs. Whatever might have happened without them, what we have is bad enough that the defence collapses.
I want this stated clearly. The argument that the IPP contracts saved Pakistani industry is, in my view, factually false. The data shows the opposite. Anyone who continues to make this argument is either uninformed or dishonest. There is no third option.
The public should have been told the truth
In any country with a functioning democracy, when the government plans to sign contracts that will affect every citizen for thirty years, those citizens have a right to know what is being signed.
Pakistan in 1994 did not consult its citizens about the Power Policy. The contracts were drafted in secret. The terms were not made public. Parliament was not given meaningful information. The people who would pay for these contracts, every Pakistani who would ever pay an electricity bill, were not part of the conversation.
The same pattern repeated in 2002, in 2006, and especially in 2014-2018 with CPEC. The Chinese power contracts were signed under bilateral confidentiality clauses. The full financial terms were never disclosed publicly. Parliament was given summaries, not actual agreements. Citizens were told CPEC was a "game changer", they were not told that game change involved twenty-seven to thirty-four percent dollar returns to Chinese state-owned enterprises for thirty years.
In 2020, when Imran Khan's own commissioned inquiry produced findings, those findings were buried. The public was not told what the report contained. The decision to suppress it was made through phone calls and cabinet manoeuvres, not through any honest accounting to the citizens whose money was at stake.
In 2026, when the solar crackdown was introduced, the government did not say openly: "we are doing this to protect IPP capacity payments because the contracts cannot be restructured." It said vague things about grid stability and rationalisation. The actual reason, the financial obligation to forty families and Chinese companies, was kept implicit, not explicit.
This is a thirty-year pattern of withholding the truth from the public. It is, in my view, the deepest scandal of all. The economic damage is severe, but the moral damage is worse. A democracy in which citizens are not told what is being done with their money in their name is not a real democracy. It is a transactional arrangement in which the elite makes decisions and the public pays the bill.
If I had been told, in 1994, that my electricity bill would be tripled in real terms over the next thirty years to pay guaranteed dollar returns to forty business families, I would have wanted to know. I would have wanted to argue. I would have wanted other options to be considered. The fact that I was never asked, never told, never consulted, that is what makes this not just an economic failure but a democratic failure.
Going forward, I believe every major energy contract should be debated publicly before signing. The full terms should be available to citizens. Parliament should examine them seriously. The era of secret contracts that bind future generations should end. We have paid too much for the privilege of being kept in the dark.
No party gets a pass on this
When I started this investigation, I was prepared to find that one political party was responsible. That would have been a simpler story. By the end, I had found something more uncomfortable. Every major political force in Pakistan has been complicit, in different ways, at different times.
The PPP signed the original 1994 contracts under Benazir Bhutto. Those contracts created the structural problem we have been paying for ever since.
The PML-N expanded the system. The 1991 privatisation that created the Mansha empire happened under Nawaz Sharif. The HUBCO crisis of 1997 was mishandled by his second government. The CPEC contracts of 2014-2018, with the worst terms of any era, were signed by his third government.
The Musharraf government repeated the 1994 mistakes in 2002 with marginal improvements that were not enough. The 2006 renewable framework, also under Musharraf, became a vehicle for sugar barons and other politically connected interests.
The PTI, under Imran Khan, commissioned the 2020 inquiry, the one substantive achievement of any government on this issue, and then buried it under Chinese pressure. Imran appointed an IPP owner as his energy advisor. He had a Federal Energy Minister whose own family was named as an IPP beneficiary in his own commissioned report. He did not pursue accountability for any of the people his own report identified.
The current PML-N government under Shehbaz Sharif has terminated five IPPs and renegotiated fourteen others, modest progress. It has not released the 2020 report, has not conducted forensic audits, has not pursued recovery, has not seriously raised CPEC renegotiation, has not privatised the DISCOs, and has actively damaged the solar transition. The Prime Minister's own son owns a power company that continues to collect capacity payments while he lives in London as a fugitive from justice.
When I look at this record, I do not see a story of one bad party and one good party. I see a story of an entire political class that has, in different ways and at different times, served the same forty families and the same structural arrangement.
I am not interested in tribal political loyalties on this issue. The next election will produce another government from the same political class. That government will have the same opportunity to fix the system. Whether it does or not is what matters, not which party it represents.
Citizens who treat this issue as partisan are letting themselves be played. The system has survived because its beneficiaries have made sure that no party can be blamed in isolation, and therefore none can be effectively challenged. The only way out is to make energy reform a non-partisan demand on every political force, regardless of which one currently holds power.
The bureaucracy is part of the problem
Most discussions of this crisis focus on Prime Ministers. I have come to believe this is misleading. Prime Ministers come and go every eighteen months on average. The bureaucracy that drafts contracts, sets tariffs, approves payments, and manages day-to-day operations stays for thirty years.
The architecture of the disaster is bureaucratic, not political. The political leaders are the public face of decisions that civil servants and regulators have actually engineered. To understand the system, you have to look at the institutions, not just the politicians.
NEPRA, the regulator that was supposed to protect consumers from excess IPP profits, has spent twenty-five years approving the tariff structures that produced those excess profits. Its officials gave themselves three-fold salary increases in 2025, taking their packages above the salaries of Supreme Court judges, without obtaining the cabinet approval the law requires. This is not a regulator acting in the public interest. This is a regulator serving its own interests.
The Power Division has, across multiple governments, accepted IPP-favourable interpretations of contractual ambiguities, resisted forensic audits, and operated through the same patterns regardless of which political party is in power. When senior bureaucrats retire, they often join boards of companies they previously regulated. The revolving door is the architecture of capture.
When the 2020 inquiry report named specific bureaucratic failures, none of the named institutions reformed itself. NEPRA's response to the report was to claim it had not been consulted, which was technically accurate and substantively meaningless. The bureaucracy protected itself, as bureaucracies do, by deflecting responsibility outward.
I want to be careful here. Most Pakistani civil servants are honest, hard-working, underpaid people doing their best in a difficult system. The criticism is not of civil servants as a class. It is of specific institutions whose senior leadership has, over decades, made choices that served narrow interests at the expense of the public.
Any honest reform must include accountability for the bureaucracy, not just the politicians. The Federal Secretaries who approved the contracts. The NEPRA officials who approved the tariffs. The Power Division officials who manage the day-to-day administration. These individuals have names. They have records. They are still alive, many of them, drawing pensions and sitting on private boards. Their contributions to this disaster should be examined, not ignored.
Without bureaucratic accountability, political accountability alone is not enough. A new Prime Minister cannot reform a system whose institutional machinery is committed to maintaining the status quo. The reform agenda must include the structures, not just the leaders.
Pakistan needs a leader who will be aggressive
If I were Prime Minister, I would not be passive about this. I would be aggressive in the way I have seen leaders elsewhere, including Donald Trump on trade, be aggressive about issues they considered existential.
Aggression in this context does not mean recklessness. It means treating the IPP system as a national emergency that requires emergency action. It means being willing to absorb short-term political and economic pain to achieve long-term structural change. It means moving on multiple fronts simultaneously, before opposition can organise. It means being willing to confront powerful interests, domestic and foreign, that have been told for decades they would never be confronted.
The reason I have come to this view is that I have looked at what passive engagement has produced. Thirty years of passive engagement. Three trillion rupees in cumulative budgetary support to the power sector between 2007 and 2019. Trillions more in capacity payments since then. A grid heading toward financial collapse. Industry destroyed. Citizens crushed. The passive approach has had its chance, and it has failed.
An aggressive Prime Minister would do specific things. Declare a national energy emergency. Release the 2020 report on day one. Freeze capacity payments pending forensic audit. Convene the IPP owners and offer them a binary choice, restructure now at twelve percent rupee returns, or face full forensic audit and prosecution under existing laws.
An aggressive Prime Minister would fly to Beijing and tell President Xi Jinping directly: we have a problem, here is the data, we need to restructure CPEC IPP terms, here is what we can offer in return, the alternative is grid collapse and you collect nothing. He would treat it as a real negotiation, not as a polite request.
An aggressive Prime Minister would tell the IMF: we are restructuring our power sector, we need eighteen months of flexibility on circular debt targets, here are the specific verifiable commitments we are making in return. He would frame the conversation in terms of his strategy, not their conditions.
An aggressive Prime Minister would back DISCO privatisation by force of will, accepting the labour protests and the political cost, because the math of doing nothing is worse than the math of doing something.
Most importantly, an aggressive Prime Minister would do all of these things in the first ninety days, before the establishment, the courts, the IPP families, and foreign governments could organise resistance. After ninety days, the window narrows. Speed is the strongest weapon a reformer has.
I do not see a leader of this kind in current Pakistani politics. I do not know when or whether one will emerge. But I want to make my position clear: I do not believe Pakistan's problem is the absence of solutions. The solutions exist and have been documented. The problem is the absence of a leader willing to use the full toolkit available, simultaneously, with the political courage to absorb the consequences. That kind of leader is what Pakistan needs.
Information is the first weapon, and it is in our hands
After everything I have considered, I have come back to one conclusion that gives me hope despite the difficulty of the broader picture.
The single most important factor in the survival of the IPP system has been public ignorance. Not because the public is stupid, the public is not, but because the information has been deliberately kept obscure, hidden in technical reports, scattered across newspaper archives, buried in suppressed inquiries.
When the public does not know who owns the IPPs, what the contract terms are, how much money flows where, and who benefits from the architecture, the system is safe. Decision-makers can pretend that the high bills are due to mismanagement, theft, fuel prices, the previous government, the rupee, the IMF, anything except the actual contractual obligations to forty families and twenty-one Chinese plants.
Once the public does know, the system becomes vulnerable. Politicians who defend the IPP families lose credibility. Bureaucrats who protect them face questions. The narratives that have shielded the architecture for thirty years stop working.
Information is the thing the system cannot stop us from sharing. They could, and did, bury the 2020 report. They could not bury the leaks of its findings. They could change the regulations on solar. They could not change the fact that millions of Pakistanis already understand why their bills are so high.
The era we live in is, in this respect, different from any era before it. Information moves faster than any government can suppress it. WhatsApp groups, social media, podcasts, video clips, and books like the ones I have written can reach millions of Pakistani households in ways that were not possible in 1994 or 2002 or even 2014. The technological balance has shifted in favour of citizens.
Our job, as ordinary Pakistanis, is to use this advantage. Share the information. Discuss it openly. Argue about it. Make the basic facts of the system common knowledge. Make it impossible for politicians to lie about it. Make it embarrassing for journalists to cover it superficially. Make it dangerous for officials to suppress it.
This will not solve the problem alone. But it will create the conditions under which a future leader, when one finally appears with the necessary mandate and courage, can act with broad public support behind them. Without that support, even the best leader fails. With it, even an imperfect leader can deliver real change.
In closing
These are my positions. They have not been arrived at lightly. Each one represents weeks of thought, conversation, reading, and argument. I have tried to be honest. I have tried to consider the other side. I have changed my mind on some specific points along the way. On the core questions, my views have only become more certain.
I want to end with one observation that has stayed with me throughout this work.
Pakistani citizens have endured this system for thirty years. They have paid bills that strangled their household budgets. They have watched factories close. They have lost jobs. They have seen their children's opportunities reduced. They have done this without ever being told the full truth about why.
Despite all of this, they have not given up on the country. They have continued to work. To raise families. To pay taxes. To vote, even when voting felt futile. To install solar panels with their own money rather than abandon their homes. To keep believing, against significant evidence, that things could get better.
That patience and that perseverance is, in my view, the most important resource Pakistan has. It is more valuable than any natural resource, any geographical advantage, any diplomatic position. It is the raw material from which any future Pakistan will be built.
The least we can do, as citizens, is to deserve this resilience. To work toward a country that is, in modest ways, a little more honest with the people who have given it so much. To insist on truth where lies have been comfortable. To support each other across the partisan lines we have been pushed into. To leave behind, for our children, a country in which the basic facts of who runs what and who benefits from what are not buried in foreign policy archives and unpublished government reports.
That is what I believe in. That is the country I want to help build. That is why I have written all of this, this article, the documents that came before it, and the documents that will come after, and put my name on it.
The contracts were signed in our name. The bills come to our address. The truth, at minimum, belongs to us.
Thank you for reading.
What you can do today
Forward this article to ten people. Discuss it at your dinner table. Bring it up at family gatherings. Argue about parts of it. Disagree with parts of it. Make people think. The goal is not to convert everyone to a single political position. The goal is to make the basic facts of the system common knowledge.
, Asad Baig, Lahore, April 2026
Notes and sources
Every claim in this article is drawn from publicly available sources, including:
Power Sector Inquiry Report 2020 (committee headed by Muhammad Ali, former SECP Chairman)
NEPRA State of Industry Reports 2015-2024
IEEFA Reports on the Pakistan Power Sector by Haneea Isaad
International Growth Centre, "Sustainable Pakistan" Growth Brief (June 2025)
Dawn, "Most of IPPs owned by 40 Pakistani families, groups" (22 July 2024)
Dawn, "Top NEPRA officials hike salaries without cabinet nod" (17 February 2025)
The Express Tribune, "187 mills shut down in Punjab" (14 February 2025)
FIA challan against Sharif family members (November 2020)
NAB list of 71 politicians and bureaucrats (October 2018)
Pakistan Bureau of Statistics, Textile export data 2000-2024
APTMA public statements 2023-2025
Gohar Ejaz public data release on IPP payments (July 2024)
A complete source list appears in the books The People's Bill and My Position, both available at [yourdomain.com/books].
Yasir Rai
