In a significant move aimed at enhancing energy cooperation and economic stability, Pakistani Power Minister Muhammad Leghari announced on Monday that China and Pakistan have agreed to convert their coal plants to use local coal. This strategic decision comes amid ongoing challenges in Pakistan’s energy sector, particularly the financial burden of capacity payments to Independent Power Producers (IPPs), which have strained the national economy since 2018.
Leghari emphasized that China has taken the issue of ‘debt profiling’ seriously, which is crucial for this transition. The shift to local coal is expected to alleviate some of these financial pressures and support broader reforms aimed at reducing electricity prices and improving energy efficiency.
The announcement followed a meeting with the MQM delegation, led by MNA Mustafa Kamal, regarding Karachi’s electricity issues. Leghari stated that expensive power plants would be retired, and imported coal-based plants would be converted to use local coal. “Our government intends to lower electricity prices. We are working practically rather than holding sit-ins or press conferences,” he said.
Leghari also addressed concerns raised by the former prime minister, stating, “Yesterday, the former prime minister said that Gohar Ejaz cannot explain the issue of capacity rates, and I say that even if Gohar Ejaz forms his own Supreme Court, no one will understand him.”
Mustafa Kamal, leading the MQM delegation, highlighted the adverse impact of IPP agreements on the economy. He emphasized that capacity payments are a significant issue for the national economy, and every era’s IPP agreements have been detrimental. Kamal noted, “The government has prioritized the issue of expensive electricity, and we should not cause discomfort to anyone to convey our message to the government.”
Kamal further mentioned the severe power outages of up to 18 hours in Karachi and suggested that reducing the profits of local IPPs could save the country. He assured that the public would hear good news in the coming days and discussed the potential for industrialization in Karachi.
He also urged for the liberalization of the market for Distribution Companies (Discos), ending their monopoly across the country. “The market for Discos should be liberalised,” Kamal suggested, emphasizing the need for political and administrative discussions to address the IPPs issue.
This agreement between Pakistan and China marks a significant step towards resolving the ongoing energy crisis, with the shift to local coal expected to provide much-needed financial relief and stability to the country’s energy sector.
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