Pakistan paid Rs2.935 trillion to independent power producers in the first eleven months of the last fiscal year. Of that, Rs1.565 trillion was capacity payments, money tied to the availability of generating capacity, not to electricity that anyone actually used. Much of it went to plants that sat idle, because the country now has more generating capacity than it has demand. Read that number again. Then set it beside a smaller one. Seven hundred and twenty-nine people are paid to report to a steel mill that has produced nothing since 2015. Last year the Economic Coordination Committee approved their salaries out of funds already in the budget. Nobody was required to explain why.
These are the same act at two scales. In each case the state pays for something that produces nothing, because paying is easier than deciding. None of this is really about electricity or steel. It is about how the country governs. The easy explanation, that the country signed bad contracts and ran a mill into the ground, is not wrong. It is just not deep enough. The real problem is that Pakistan has never built an institutional mechanism strong enough to make the state confront powerful interests when circumstances change. This is what I have come to call the problem of trigger independence, and it sits at the centre of the wider policy-to-action gap I keep writing about. Reform survives where the trigger for action is independent of those whose interests it disturbs. Where the trigger is external, matters proceed. Where it is internal, they do not proceed at all.
Watch where the movement actually came from. In 2024 and 2025, several IPP contracts were finally terminated ahead of schedule. NEPRA records show the agreements of Rousch Power, Lalpir, Saba Power, HUBCO and Atlas Power ended in October 2024, and Pakgen's a few months later, on 31 January 2025. Others were amended rather than ended. Attock Gen, for one, accepted reductions in several tariff components and a hybrid take-and-pay arrangement.
Something moved. But it did not move because the state suddenly discovered the contracts were expensive, or that capacity now exceeded demand. Both had been visible for years. It moved when public anger over electricity bills became impossible to ignore and the IMF became part of the reform environment. The cost of doing nothing finally rose above the cost of acting. That is the whole point. The trigger was not built into the institution. It had to come from outside.
The steel mill makes the same point from the other direction. Elsewhere in Karachi, a privately owned steel producer operates normally, under the same tariff regime, the same energy costs and the same regulator in which Pakistan Steel Mills failed. The two are not industrially identical, and that is the point. Ownership is not the variable that separates them. One faces a balance sheet that must clear and competitors who will take its market if it does not. The other faces neither. Ownership alone does not determine outcomes. Contract design does. Competition does. Accountability does.
Until Pakistan can answer that inside its own institutions, reform will keep depending on crisis. An IMF programme will force one change, a public protest another, a fiscal emergency a third, and when the pressure lifts the old system will quietly return.
This is why the familiar argument about whether IPPs or public enterprises are good or bad misses the target. The private sector did not invent Pakistan's governance problem. The state wrote the contracts, guaranteed the returns, approved the tariffs, built the single-buyer structure, and let capacity expand faster than demand. When the arithmetic became difficult, it renegotiated a handful of contracts and carried the rest.
And even when it acts, the state finds a way to postpone the decision. Look at circular debt. The Power Division reports that the stock was cut to Rs1.614 trillion by June 2025, down from about Rs2.393 trillion a year earlier. That sounds like a solution. But it was not achieved by removing the mechanism that creates the debt. The government borrowed Rs1.225 trillion from commercial banks and is servicing it, over six years, through a Rs3.23-per-unit surcharge on consumers. The liability did not disappear. It moved. From the producer to the government, from the government to the bank, from the bank to the consumer, and in the end from today's consumer to tomorrow's taxpayer. And it is already coming back. A year after that reduction, the stock had crept up again, past Rs1.6 trillion and towards Rs1.7 trillion, despite the loans, the surcharge and the IPP deals. Pakistan has become very good at moving liabilities without removing the incentives that create them.
This is why the two idle assets belong in the same sentence. Pakistan Steel Mills, the IPP contracts, PIA, dozens of public enterprises, local governments that never receive the powers written into law. Each case is different. The pattern is the same. It is easier to refinance than to restructure, easier to subsidise than to reform, easier to build another committee than to give an existing institution the authority to act, and easier to ask citizens to absorb the cost than to confront the interests that benefit from the arrangement.
The answer is not to tear up contracts at will. Nor is it to defend every contract forever, whatever changes around it. A contract can be legally valid and still become economically unsustainable, and the public is entitled to ask whether the framework itself still makes sense. That is what regulation is for. What Pakistan needs is a set of triggers built into the system, so that action does not wait for a crisis. Some of this is simple. Capacity payments should sit in public view: who is paid, how much, for what capacity, at what tariff, under which contract, and against what actual use, all in one place a citizen can read without filing a parliamentary question. Ten large IPPs already account for around 40 percent of total capacity payments, which makes that transparency more important, not less.
Then automaticity. There should be published utilisation thresholds that force a review when a plant sits persistently idle, and an independent reassessment of any major contract when demand, technology or costs change materially. NEPRA should have the authority, the resources and the institutional protection to enforce those standards. Any state enterprise left inactive for three consecutive years, a steel mill among them, should move automatically to restructuring, sale or closure unless Parliament approves a funded revival plan. And the country must move towards a genuinely competitive electricity market, so that a single buyer stops socialising every inefficiency.
The real question is harder, and it is the same one the steel mill has been putting to the state for eleven years and the electricity bill puts to it every month. Who must act, by when, and what happens to them if they do not? Until Pakistan can answer that inside its own institutions, reform will keep depending on crisis. An IMF programme will force one change, a public protest another, a fiscal emergency a third, and when the pressure lifts the old system will quietly return. That is not reform. It is crisis management. And its cost arrives every month, in the same quiet line on the bill: the price of a state that still finds it easier to pay than to decide.