Power Sector Interventions Fail to Spark Growth
- Islamabad - Pakistan's power sector continues to hinder economic growth and erode consumer trust despite over 35 years of policy interventions, according to the National Electric Power Regulatory...
- Nepra detailed these concerns in its 'State of the Industry Report 2025', also acknowledging that its own regulatory authority has been weakened by administrative and legal challenges.
- The report states that distribution companies (Discos) contributed approximately Rs400 billion to the circular debt.
Pakistan’s Power Sector Struggles After Decades of Reform
Islamabad – Pakistan’s power sector continues to hinder economic growth and erode consumer trust despite over 35 years of policy interventions, according to the National Electric Power Regulatory Authority (Nepra). Gains from renegotiations with power producers are being offset by ongoing inefficiencies, the regulator found.
Nepra detailed these concerns in its ‘State of the Industry Report 2025’, also acknowledging that its own regulatory authority has been weakened by administrative and legal challenges.
The report states that distribution companies (Discos) contributed approximately Rs400 billion to the circular debt. In fiscal year 2024-25, consumers paid around Rs235 billion in debt servicing surcharges (DSS) – not as a result of standard business practices, but due to systemic inefficiencies.
Despite some policy changes, “overall progress remained limited and insufficient to instil confidence in its ability to drive sustained industrial growth and provide meaningful relief to electricity consumers,” Nepra wrote. The sector faces ongoing operational and governance issues that limit its efficiency and economic contribution.
Nepra report says inefficiencies continue to fuel circular debt
Underutilized generation capacity leads to ongoing financial burdens through capacity payments for idle plants. The transmission network is both underutilized and strained, resulting in higher transmission tariffs and preventing the dispatch of electricity from cheaper sources according to the Economic merit Order (EMO).
Government-owned Discos continue to demonstrate poor governance, with transmission and distribution (T&D) losses exceeding acceptable levels, low bill recovery rates, and load-shedding practices tied to Aggregate Technical and Commercial (AT&C) losses. These inefficiencies contribute to the circular debt and underutilization of power assets.
The challenges facing power sector entities, primarily those owned by the government, are complex and affect planning, execution, and operations. “Persistent inefficiencies in strategic planning, project implementation, and ro