How can Pakistan’s power system and the structure of electricity bills be reformed? (Fourth Episode)
Despite the payment of billions of rupees to power plants, if small cities and towns across Pakistan are still experiencing eight to ten hours of load shedding, then what was the purpose of establishing such an expensive system?
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Should IPPs not have been required not only to generate electricity but also to ensure its transmission and distribution within their designated areas, so that power could reach even the most remote parts of the country?
In the previous episode, you were introduced to private power producers, commonly known as IPPs. These are private companies operating under formal agreements to generate electricity in Pakistan. However, what is unfolding in practice, and how the cost of sustaining this system is ultimately passed on to the public, raises important questions.
In that context, I also presented some initial comparisons in the third episode.
Before advancing further in this fourth episode, I would like to draw your attention to a significant global example, that of Nigeria.
In the 1970s, oil was discovered in Nigeria. Across the world, the discovery of oil has transformed national economies. In many countries, it led to higher national income, improved infrastructure, expanded employment opportunities, and a visible improvement in public welfare. Nigeria, however, followed a different trajectory. Instead of benefiting the broader population, oil wealth became concentrated among a narrow group closely connected to power.
During this period, Nigeria was dominated by military rulers, powerful bureaucrats, elite circles, certain politicians, and influential business groups. As a result, national resources flowed not towards the public but remained confined within these networks. The general population continued to face poverty, deprivation, and underdevelopment, while those close to power grew increasingly wealthy.
This trend reached its peak during the rule of General Sani Abacha from 1993 to 1998, when corruption escalated dramatically. During this period, an estimated two to five billion dollars were systematically siphoned from the state treasury and transferred abroad. These funds were deposited in Swiss banks, accounts in the United Kingdom and Europe, and invested in luxury properties and other assets in the United States.
Subsequent investigations, including the World Bank’s Stolen Asset Recovery Initiative report and reporting by international media such as the BBC and Reuters, revealed how a head of state was able to move billions through the global financial system. Following international pressure and legal proceedings, approximately 1.3 billion dollars were repatriated from Switzerland, with additional recoveries from the United States, the United Kingdom, and other jurisdictions, bringing the total to around three billion dollars. This case became widely known as the “Abacha loot.”
Nigeria thus emerged as a defining example among resource rich nations, where natural wealth existed in abundance, yet the population remained deprived of its benefits. The world witnessed a stark contradiction, vast oil wealth on one side, and a population lacking basic services on the other.
In this context, a term gained global prominence, Kleptocracy.
Kleptocracy is not merely a term but a system of governance in which state power is used not to serve the public, but to extract wealth from it. In such a system, public resources become instruments of enrichment for the ruling class. The flow of wealth is redirected away from citizens and towards ruling elites, powerful groups, and select business interests. This is not simply corruption in the conventional sense, but a structured system in which policies, contracts, and financial decisions are aligned in a way that facilitates this transfer.
The term itself is derived from two Greek words, Klepto meaning theft and Cracy meaning rule, describing a system in which those in power shape laws, policies, and institutions in ways that gradually transfer wealth from the public into the hands of a limited few.
In a kleptocratic system, laws are often designed to protect specific interests rather than the public, making it one of the most complex and dangerous forms of exploitation, visible in its effects yet difficult to prove.
One of its defining features is the creation of a broad class of beneficiaries. From bureaucratic structures to business circles, anyone who gains from the system becomes invested in its continuation, forming a protective shield around it.
This is the central tragedy, corruption is no longer an unintended outcome, but the very purpose of the system. In such conditions, reform efforts repeatedly fail, not because of isolated flaws, but because the entire structure is designed to sustain dysfunction.
Returning to the core focus of this analysis, this framework of kleptocracy offers a lens through which Pakistan’s power sector and its electricity billing system can be examined.
The Government of Pakistan pays approximately three trillion rupees annually to power plants with a total installed capacity of sixteen to eighteen thousand megawatts. Yet many of these plants do not operate at full capacity, and payments continue regardless of actual generation levels.
A review of load shedding patterns over the past six months shows that, excluding cities such as Islamabad, Lahore, and Faisalabad, many areas in Karachi, Khyber Pakhtunkhwa, interior Sindh, and Balochistan have consistently faced eight to twelve hours of load shedding. This reflects a profound administrative failure, payments to IPPs continue, yet an effective transmission and distribution system has not been developed since 1994 to deliver electricity to distant regions.
As a result, available capacity is underutilised, electricity is wasted, and the public continues to endure prolonged outages while also paying substantial fixed charges and fuel cost surcharges in their bills.
There was a time when public complaints were limited to load shedding. However, there was at least one mitigating factor, lower consumption meant lower bills, as charges were based solely on usage. Today, the situation has fundamentally changed. Consumers face both persistent load shedding and an increasing burden of fixed charges and fuel adjustments.
In effect, the public is not only experiencing energy shortages, but is also bearing the financial cost of past policy failures.
(To be continued in Episode 5)
In the previous episode, you were introduced to private power producers, commonly known as IPPs. These are private companies operating under formal agreements to generate electricity in Pakistan. However, what is unfolding in practice, and how the cost of sustaining this system is ultimately passed on to the public, raises important questions.
In that context, I also presented some initial comparisons in the third episode.
Before advancing further in this fourth episode, I would like to draw your attention to a significant global example, that of Nigeria.
In the 1970s, oil was discovered in Nigeria. Across the world, the discovery of oil has transformed national economies. In many countries, it led to higher national income, improved infrastructure, expanded employment opportunities, and a visible improvement in public welfare. Nigeria, however, followed a different trajectory. Instead of benefiting the broader population, oil wealth became concentrated among a narrow group closely connected to power.
During this period, Nigeria was dominated by military rulers, powerful bureaucrats, elite circles, certain politicians, and influential business groups. As a result, national resources flowed not towards the public but remained confined within these networks. The general population continued to face poverty, deprivation, and underdevelopment, while those close to power grew increasingly wealthy.
This trend reached its peak during the rule of General Sani Abacha from 1993 to 1998, when corruption escalated dramatically. During this period, an estimated two to five billion dollars were systematically siphoned from the state treasury and transferred abroad. These funds were deposited in Swiss banks, accounts in the United Kingdom and Europe, and invested in luxury properties and other assets in the United States.
Subsequent investigations, including the World Bank’s Stolen Asset Recovery Initiative report and reporting by international media such as the BBC and Reuters, revealed how a head of state was able to move billions through the global financial system. Following international pressure and legal proceedings, approximately 1.3 billion dollars were repatriated from Switzerland, with additional recoveries from the United States, the United Kingdom, and other jurisdictions, bringing the total to around three billion dollars. This case became widely known as the “Abacha loot.”
Nigeria thus emerged as a defining example among resource rich nations, where natural wealth existed in abundance, yet the population remained deprived of its benefits. The world witnessed a stark contradiction, vast oil wealth on one side, and a population lacking basic services on the other.
In this context, a term gained global prominence, Kleptocracy.
Kleptocracy is not merely a term but a system of governance in which state power is used not to serve the public, but to extract wealth from it. In such a system, public resources become instruments of enrichment for the ruling class. The flow of wealth is redirected away from citizens and towards ruling elites, powerful groups, and select business interests. This is not simply corruption in the conventional sense, but a structured system in which policies, contracts, and financial decisions are aligned in a way that facilitates this transfer.
The term itself is derived from two Greek words, Klepto meaning theft and Cracy meaning rule, describing a system in which those in power shape laws, policies, and institutions in ways that gradually transfer wealth from the public into the hands of a limited few.
In a kleptocratic system, laws are often designed to protect specific interests rather than the public, making it one of the most complex and dangerous forms of exploitation, visible in its effects yet difficult to prove.
One of its defining features is the creation of a broad class of beneficiaries. From bureaucratic structures to business circles, anyone who gains from the system becomes invested in its continuation, forming a protective shield around it.
This is the central tragedy, corruption is no longer an unintended outcome, but the very purpose of the system. In such conditions, reform efforts repeatedly fail, not because of isolated flaws, but because the entire structure is designed to sustain dysfunction.
Returning to the core focus of this analysis, this framework of kleptocracy offers a lens through which Pakistan’s power sector and its electricity billing system can be examined.
The Government of Pakistan pays approximately three trillion rupees annually to power plants with a total installed capacity of sixteen to eighteen thousand megawatts. Yet many of these plants do not operate at full capacity, and payments continue regardless of actual generation levels.
A review of load shedding patterns over the past six months shows that, excluding cities such as Islamabad, Lahore, and Faisalabad, many areas in Karachi, Khyber Pakhtunkhwa, interior Sindh, and Balochistan have consistently faced eight to twelve hours of load shedding. This reflects a profound administrative failure, payments to IPPs continue, yet an effective transmission and distribution system has not been developed since 1994 to deliver electricity to distant regions.
As a result, available capacity is underutilised, electricity is wasted, and the public continues to endure prolonged outages while also paying substantial fixed charges and fuel cost surcharges in their bills.
There was a time when public complaints were limited to load shedding. However, there was at least one mitigating factor, lower consumption meant lower bills, as charges were based solely on usage. Today, the situation has fundamentally changed. Consumers face both persistent load shedding and an increasing burden of fixed charges and fuel adjustments.
In effect, the public is not only experiencing energy shortages, but is also bearing the financial cost of past policy failures.
(To be continued in Episode 5)