🔳 Pakistan’s experience with Iranian electricity demonstrates that the country’s power sector crisis is not limited to domestic IPPs but is rooted in a broader pattern of flawed policy design, weak institutions and long term dependence on costly external arrangements. Over 24 years, what began as a temporary solution has evolved into a structurally embedded burden characterized by dollar indexed payments, oil linked tariffs, Take or Pay obligations and inefficiencies in transmission and distribution.
1. Gradually phase down reliance on imported electricity by setting a defined timeline and replacing it with locally generated renewable energy in Balochistan and other affected regions. 2. Launch targeted investments in solar, wind and battery storage projects in Gwadar and Makran, supported by decentralized mini grid systems to ensure long term energy independence. 3. Reform power purchase agreements by eliminating dollar indexation, reducing exposure to oil linked tariffs and removing rigid Take or Pay clauses in future contracts. 4. Strengthen transmission and distribution systems, particularly in high loss areas like QESCO, by reducing line losses, improving billing recovery and enforcing accountability mechanisms. 5. Establish a transparent national audit of all electricity import arrangements and publicly disclose total payments, contract terms and comparative cost analyses to guide future policy decisions.
🔲 Public Investigative Series Episode 31
Topic: How Can Pakistan’s Electricity System Be Fixed?
Title: Iranian Electricity Part 3
🔺 When institutions avoid providing facts, reaching the truth becomes the responsibility of the people.
Written and researched by Syed Shayan
Pakistan has been importing electricity from Iran since 2002. Yet the public has never been clearly told how much money Pakistan has spent on this electricity in total.
The available record shows only one part of the story: after importing electricity from Iran, Pakistan faced serious difficulties in making payments to TAVANIR. Due to sanctions on Iran and the unavailability of banking channels, payments remained stuck for almost three years. Later, in 2014, an alternative payment mechanism was developed during the Pak Iran Joint Economic Commission. On March 14 and 15, 2019, TAVANIR, the Power Division, CPPA and NTDC agreed that CPPA would pay 12 million dollars every month for current bills and old arrears.
At that time, the US dollar was around Rs 139 to Rs 140. In Pakistani currency, this amount was approximately Rs 1.7 billion per month. On an annual basis, it was close to Rs 20 billion.
It is also important to understand that the payment burden related to Iranian electricity has grown over time.
Initially, the arrangement was for approximately 74 MW of electricity. Later, it increased to 100 MW. Now, after NEPRA’s recent approval in May 2026, another 100 MW is being added to the existing 104 MW supply, taking the total capacity to around 204 MW.
This means that as the volume of electricity imported from Iran increases, Pakistan’s payment obligation also increases.
What once appeared to be a limited payment arrangement has now become a much larger financial commitment, especially when the tariff is linked to the US dollar, oil prices and Take or Pay conditions.
Therefore, the real question is not simply whether Pakistan imported electricity from Iran or how much electricity was imported. The real question is why an arrangement that may have started as a temporary solution has remained a permanent dependency even after 24 years.
If governments between 2002 and 2026 had acted with seriousness, Balochistan, especially Gwadar and Makran, could have been moved toward local energy self sufficiency.
Solar parks could have been developed. Wind power projects could have been established in coastal areas. Small dams, battery storage and local mini grid systems could have been built, where fuel cost would be zero and electricity would be generated from natural resources.
Yet 24 years later, the same problem remains: imported electricity, US dollar based payments, oil linked tariffs, Take or Pay conditions, a weak grid and a growing burden on the people.
This is a clear failure of Pakistan’s policy departments, planning institutions and accountability mechanisms. While the nation remained under the pressure of debt, expensive electricity and circular debt, repeated opportunities to provide Balochistan with permanent, local and low cost electricity were wasted.
Today, the issue is no longer limited to 74 MW or 100 MW. After NEPRA’s recent approval, electricity imports from Iran are moving toward 204 MW, while the tariff remains linked to the US dollar and oil prices.
If 204 MW of electricity is taken at full capacity for an entire month, it comes to approximately 147 million units per month.
At 9.2 cents per unit, the monthly bill can reach around 13.5 million dollars. At 11 cents per unit, it can reach around 16.2 million dollars. At 12.4 cents per unit, it can reach around 18.2 million dollars.
At an exchange rate of approximately Rs 280 per dollar, this becomes roughly Rs 3.8 billion to Rs 5.1 billion per month.
The concern becomes even more serious because the additional 100 MW also carries a Take or Pay condition.
In simple terms, this means that even if Pakistan does not fully use the electricity, it may still be required to pay for a minimum quantity.
According to NEPRA’s record, the additional supply includes a minimum Take or Pay condition of 15 million units per month.
Now consider the cost. If the tariff is 12.40 cents per unit and the US dollar is taken at around Rs 280, this electricity costs approximately Rs 35 per unit at the purchase level alone. If 204 MW is taken at full capacity for the entire month, the monthly bill can approach Rs 5 billion.
This is only the purchase cost. It does not include line losses, theft, non recovery of bills, taxes, surcharges or distribution cost.
It is necessary to clarify that the real cost of Iranian electricity cannot be understood from the tariff alone.
According to NEPRA’s recent approval, the tariff for additional Iranian electricity is approximately 12.40 cents per unit. At Rs 280 per dollar, this translates to around Rs 35 per unit at the purchase level.
But once this electricity enters the QESCO system, the real damage begins. In financial year 2023 24, QESCO’s line losses were 29.77 percent and its recovery rate was only 32 percent.
This means that if electricity is purchased at Rs 35 per unit, nearly 30 percent of it is lost in the system or stolen before it reaches consumers. The electricity that actually reaches the consumer then effectively costs around Rs 50 per unit.
After that, when bills are not fully recovered and recovery remains only 32 percent, the scale of financial loss becomes obvious.
Pakistan first purchases expensive electricity under US dollar based, oil linked and Take or Pay conditions. It then injects that electricity into a weak distribution system where line losses, theft and poor recovery are already adding to circular debt.
This is not a technical inconvenience. It is a structural failure. The CPPA G payment system is also part of this wider problem. According to a 2022 report, around 100 million dollars were outstanding against TAVANIR as of September 17, 2020. The reason given was the unavailability of banking channels.
The same report stated that CPPA G made payments in Pakistani rupees to beneficiaries nominated by TAVANIR. These payments were later confirmed with TAVANIR.
This shows that the issue was never limited to electricity purchase alone. It had become a complex arrangement involving payments, sanctions, arrears and alternative financial channels.
In March 2019, CPPA, NTDC, the Power Division and TAVANIR agreed that 12 million dollars would be paid every month for current bills and old arrears. At that time, the US dollar was around Rs 139 to Rs 140. This meant approximately Rs 1.7 billion per month in Pakistani currency. On an annual basis, it was close to Rs 20 billion.
In this context, every Pakistani has the right to ask the Ministry of Energy and the Power Division the following questions.
1. Does the Government of Pakistan have any comprehensive official report on the total payments made for electricity imported from Iran between 2002 and 2026? 2. How much money has Pakistan paid in total to Iran or TAVANIR for Iranian electricity over the last 24 years? 3. If in 2019, under one payment arrangement alone, Pakistan agreed to pay 12 million dollars per month, which was approximately Rs 1.7 billion per month at that time, could the same amount not have been invested in local solar, wind, battery storage and district level electricity systems in Balochistan, especially Gwadar and Makran? 4. Does the government have any comparative study that evaluates the cost of imported electricity from Iran against local renewable energy, mini grid systems, solar wind hybrid projects and storage solutions? 5. If such a study does not exist, then on what basis was dependence on imported electricity allowed to continue for 24 years?
While writing these articles, I have repeatedly asked myself whether we have forgotten our national dignity, collective consciousness and national priorities. For 24 years, Pakistan has been buying expensive electricity from another country, yet the issue has never received the national attention it deserved.
No political leadership turned it into a national question. No major media debate pursued it consistently. No institution explained to the public why Pakistan failed to create a local energy arrangement for Makran, Gwadar and Balochistan over such a long period.
When I first started writing this report on Pakistan’s power sector, I thought it would be completed in 20 to 25 episodes.
But as the research progressed, it became clear that the crisis in Pakistan’s electricity sector is far deeper, more complex and more serious than I had initially expected.
While writing this 31st episode, I now feel that perhaps another 10 to 15 episodes will be required to complete the report properly.
My effort is to complete this series within this month and present it as a comprehensive report. That is why I am now writing even two episodes a day, so that this work can reach its logical conclusion as soon as possible.
[To be continued in the next episode.]
