Government Probes Discos’ Costly Off-Grid Power Deals

The government has discovered that power distribution companies were purchasing electricity outside the national grid at exorbitant rates, violating merit order rules. An inquiry has been launched, and strict directives issued to ensure compliance with Nepra’s codes and least-cost power procurement.

The government has revealed that several electricity distribution companies (Discos) have been purchasing power outside the national grid at inflated rates, sparking concern amid ongoing public frustration over high tariffs and load-shedding. According to an official statement, these companies were sourcing electricity from small power producers (SPPs) and captive power plants (CPPs) through bilateral contracts, bypassing the national grid and the Independent System and Market Operator (ISMO).

Although the names of the companies and the scale of purchases were not disclosed, Power Minister Awais Leghari has ordered an independent inquiry into the matter. He directed that the practice be discontinued immediately and aligned with the National Electric Power Regulatory Authority’s (Nepra) grid code and distribution code.

The minister emphasized that power procurement must follow the economic merit order to ensure least-cost electricity for consumers. The Power Division has instructed all Discos to avoid off-merit purchases unless explicitly approved by ISMO. Future off-take from SPPs and CPPs will only be permitted if it falls within the national merit order, determined by incremental generation costs. The move aims to restore transparency and protect consumers from unnecessary financial burdens.