Is it time to retire Pakistan's idle coal giants?

At the heartland of Punjab, in the city of Sahiwal, a massive coal-fired power plant stands as a monument to both achievement and miscalculation. The 1,320-megawatt facility, built with Chinese financing just eight years ago to banish Pakistan's crippling blackouts, now operates at less than 20% capacity. Yet Pakistani consumers continue paying for its full capacity, part of an annual burden exceeding USD 1 billion across the nation's coal fleet.

This is the paradox at the heart of Pakistan's energy crisis: power plants built to solve yesterday's problems have become today's financial millstones, even as the country desperately needs to transition to cleaner, cheaper energy sources. A new analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) offers a potential escape route, one that could save billions, reduce emissions, and paradoxically, protect the very investors who built these plants.

The rise and fall of king coal in Pakistan

The story begins in 2014, when Pakistan faced a different energy crisis entirely. Daily blackouts lasting 12-18 hours paralyzed industry and made life miserable for millions. The government, desperate for rapid solutions, turned to China and its Belt and Road Initiative. The result was the China-Pakistan Economic Corridor (CPEC), which promised $15.5 billion in energy investments, with coal-fired power plants as the centerpiece.

Nine major coal plants totaling 10.4 gigawatts were fast-tracked as "early harvest" projects. By 2019, the strategy had succeeded in its primary goal: the lights stayed on.