Sins of elites and high energy costs
Imtiaz Gul heads the independent Centre for Research and Security Studies, Islamabad. And Arshad H Abbasi is an engineer having an extensive experience of working on water and power issues in Pakistan and Afghanistan
When the sixth-largest global nuclear power blames the IMF or Chinese IPPs for high energy prices and austerity measures that hit the poor the hardest, something must be fundamentally wrong. The IMF did not create Pakistan's circular debt, but the suit-donning, greedy, self-serving executioners in Islamabad did.
The real rot began when the PML-N government cleared Rs480 billion in circular debt within the first 47 days of returning to power in 2013. This coincided with the launch of the Belt and Road Initiative - the main framework for the China-Pakistan Economic Corridor. Based on their own experience, Chinese officials explicitly advised Pakistan to invest in solar, wind and hydropower.
But Pakistan's "visionary" planners discarded the advice, practically relegating major hydropower initiatives such as the Diamer Bhasha Dam, Dasu, and Bunji Hydropower Projects - with over 15,000 MW potential cumulatively - in priorities and did not include them in CPEC's energy portfolio.
Instead, the Planning Commission and the then-minister of petroleum made a ruinous decision to commission four LNG-fired power plants and also opted for imported coal-fired power plants - all based on imported coal and LNG, priced in dollars, purchased on international markets, and vulnerable to every geopolitical storm and commodity price shock on earth. This move not only robbed Pakistan of millions of jobs and cheap electricity but also deprived the nation of over eight million acre feet of water storage.
This was a moment when dozens of ageing oil and gas-fired power plants across Faisalabad, Shahdara, Karachi and Muzaffargarh could have been retrofitted to double their efficiency from 25 per cent to 50 per cent - at a cost of barely $500 million. The infrastructure was already there: transmission lines, housing colonies, road networks.
Next door, India retrofitted 17,500 MW of thermal capacity using precisely this approach, delivering cheaper electricity to its citizens. Pakistan's Ministry of Petroleum chose instead to build entirely new sites - a decision that cost the nation over $52 billion in avoidable losses.
On coal, the record is equally damning. In 2004, China's Shenhua Group proposed developing Pakistan's own Thar coal reserves - an indigenous, mine-mouth power plant that would have generated electricity at just 5.6 US cents per unit. The project collapsed over a 0.3 cent per unit tariff dispute with NEPRA.
Pakistan today pays between 12 and 17 US cents per unit - more than double the potential Thar coal cost. When 3,300 MW were eventually added from Thar coal years later, NEPRA compounded the wound by awarding an unjustifiably high tariff based on flawed engineering and inflated construction cost evaluations. The regulator entrusted to protect 260 million consumers never missed its own chance at brutality.
One wonders whether NEPRA serves consumers' interests or those of the elites who sign off on expensive gas and coal power plants.
The compounding crippling consequence of NEPRA's policies: as of May 2026, Pakistan's total energy-sector circular debt stands around Rs5.2 trillion ($1819 billion), according to the latest IMF-linked figures. This includes Rs1.761.84 trillion in electricity and Rs3.44 trillion in gas sector circular debt, fuelled almost entirely by the LNG commitments and the two Floating Storage and Regasification Units procured to feed the very power plants that should never have been built. The concept of gas sector circular debt did not even exist before 2013.
No surprise that, in the words of Pakistan's own Prime Minister at the World Economic Forum in Davos, "the energy sector had turned Pakistan into a global begging bowl."
Tragically, the petroleum levy acts as a daily tax on every journey, every meal, every medicine, and every dream of 260 million people. This levy is the cumulative cost of a plan that chose imported fossil fuels over rivers, sunlight and wind. It is the invoice for ignoring Chinese counsel, for bypassing Thar coal, for abandoning the great dams, for choosing LNG terminals over turbines fed by mountain waters.
Even more tragic is the fact that the architects of the power sector disaster changed accountability laws to shield themselves from justice. Today, those same individuals lecture the nation daily on television on how the power sector has become a noose around the people's necks. They die a little every day under this burden and rise again the next morning to face it anew. Isn't this an engineered economic destruction of an entire country - an act not by an enemy but by those who claim to be the guardians of over 250 million Pakistanis? Hasn't this created a crisis of survival for the poor? The hunger of a child in Karachi who cannot eat because the price of flour has been inflated by an avoidable petroleum levy is not an abstraction.
The people of Pakistan deserve to know the truth: who is responsible for this catastrophic policy? How come they are rewarded with national awards and privileged, plush jobs? When custodians weaponise neglect and rewrite laws to silence accountability, their crime transcends borders. The only question is whether the International Criminal Court will have the courage to catch up.
Without a radical rethink, review of extractive contracts and accountability of the culprits, the circular debt and the levy will keep rising, and 260 million people will keep atoning for the sins of the elites.