Among the major evils that plague Pakistan, the circular debt of its power sector clearly stands out. It has reached Rs 2.39 trillion and shows no signs of relenting. To save this sector from financial ruin, the government must explore and use every option to relieve the country’s economy and people as both are suffocating under the endless streak of tariff hikes.

According to NEPRA’s State of Industry Report 2024, poor governance of the power sector is leading to huge financial losses which exceeded Rs 740 billion in FY 2024. The main causes behind these (over 79%) were excessive losses in the systems controlled by DISCOs and lack of full revenue recovery. Out-of-merit-generation and penalties paid to IPPs for some contractual violations made up the rest (21%).

NEPRA, in its above report, sums up this sector’s performance in the following words:

“Pakistan’s power sector is entangled in a complex web of challenges, including high tariffs, ….., inefficiencies in generation, transmission, distribution and supply of electricity marked by serious governance issues….External factors like high prices of imported fuels, devaluation of the Pak Rupee, and the impact of global issues have certainly had a negative impact on the cost of electricity generation in the country. There are unabated inefficiencies, particularly on the part of monopolistic entities, making electricity increasingly unaffordable and placing an unprecedented strain on the country’s economic and financial stability.”

NEPRA continues its tirade in the following words:

“Persistent administrative and governance issues, combined with lack of planning and under-investment in technology have aggravated the power sector’s difficulties.”

Sustainable power supplies are to modern society what a healthy cardiovascular system is to the human body. The power grid is among the most critical, complex, and capital-intensive infrastructures for any country. It’s critical for providing the basic amenities to people and powering the economy. It’s even more important as it underpins the functioning of all the other infrastructures, facilities, and services in a country.

Our terminally sick and constantly bleeding power sector needed a strategic vision from our political leaders and a strong belief in that vision undeterred by any resistance on the ground from bureaucracy, political opponents, and vested interests

Pakistan was not thunder-struck with its present power sector mess It’s the culmination of decades of ill-conceived policies devised and implemented on personal whims and vested interests, bypassing the regular institutional channels. The fate of the power sector is a foregone conclusion unless the government reconsiders its own approach to running this complex enterprise and changes its course radically.

Pakistan’s Power sector issues are complex, deep-rooted, and chronic, and can’t be resolved through ad hoc policies and initiatives. It’s in dire straits now and needs a systemic overhaul. The government is welcome to use any fast-track solutions, but first, it must correct the fundamentals of this sector that are constantly sucking the blood of this nation and are potent to defeat any future efforts no matter how promising it appears in theory.

Five pillars will be essential for a viable, vibrant, and sustainable power supply system in Pakistan:

A moment’s reflection on the performance of our successive governments should make it evident that they have failed on every single count.