Pakistan’s power sector is grappling with severe challenges, including high electricity costs, systemic inefficiencies, and a ballooning circular debt that is burdening consumers. According to Nepra’s “State of the Industry Report 2023-24,” former WAPDA distribution companies (DISCOs) added a staggering Rs591 billion to the circular debt in FY2023-24, mainly due to excessive transmission and distribution (T&D) losses and weak bill collection.
The report also highlights the widespread practice of overbilling, inflating T&D losses by creating false receivables. Consumers are being penalized through the Circular Debt Surcharge of Rs3.23 per unit, which unfairly punishes honest consumers for the defaults of others. Additionally, an Anti-Theft Campaign launched in September 2023 has generated only Rs23.574 billion, far less than the sector’s outstanding dues.
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Despite a power generation capacity of 45,888 MW, only 33.88% of it was utilized, leading to inefficiencies that increase electricity tariffs. The sector has incurred financial losses of Rs276.35 billion, with transmission constraints costing another Rs60.386 billion. Poor management and operational inefficiencies have also contributed to a massive Rs314.5 billion shortfall in bill recovery.
Nepra has called for urgent reforms, including granting more autonomy to DISCOs, evaluating the performance of their boards and management, and addressing inefficiencies in billing and revenue collection. The report stresses that without immediate reform, Pakistan’s power sector will continue to struggle, leaving consumers to bear the financial burden of these systemic failures.
