Pakistan’s power sector is in a severe crisis, leading to consumers receiving high electricity bills despite facing frequent outages. The situation is attributed to misgovernance, corruption, underinvestment, and unpredictable policies, as reported by media sources in Pakistan. Even with various policy resets, the sector’s credibility remains low, with financial gains extracted from private power producers quickly offset by deep-rooted inefficiencies elsewhere in the system.
Numerous interventions, including unbundling and corporatisation of state-owned enterprises, as well as private investments in generation, have not alleviated the challenges faced by the power sector. Consumers continue to grapple with unaffordable electricity, inconsistent supplies, and a significant portion of idle generation capacity. The distribution companies have added around Rs 400 billion to the circular debt, while consumers paid approximately Rs 235 billion in debt servicing surcharge during the last fiscal year due to persistent inefficiencies across the sector’s supply chain.
The power sector’s regulatory powers have been diminishing due to administrative interference and prolonged litigation, resulting in slow and reversible enforcement actions. Weak governance and lack of accountability have hindered effective solutions through pricing adjustments and contract revisions. The sector possesses reform plans but lacks the necessary political will to implement them, improve governance, ensure accountability, eliminate policy uncertainties, and strengthen regulatory frameworks.
