The latest State of Industry Report from the NEPRA has dropped like a cold bucket of water on anyone hoping Pakistan’s power sector was finally turning the corner. After years of governments talking up “reforms,” “restructuring,” and “corrective measures,” the regulator’s latest deep dive shows the same old problems—stubborn inefficiencies, shaky governance, and financial black holes—are still very much in charge.
It’s a tough read that quietly dismantles the official storyline of steady progress and lays bare how wide the divide has grown between what’s promised in press conferences and what ordinary households and factories actually deal with every day.
The roots of so much trouble go straight back to bad deals made long ago. Past governments locked in Independent Power Producer (IPP) contracts heavy on producer protections—especially that infamous take-or-pay clause, where the government pays full capacity charges no matter how much, or how little, electricity gets used. Sure, a few older agreements got renegotiated under pressure, but the big batch signed around 2014 as part of the China-Pakistan Economic Corridor? Those stayed mostly untouched, tying the system to decades of fixed payouts. The irony bites hard: while officials push solar panels and net metering to hit green targets and cut reliance on the national grid, overall demand softens—but those guaranteed capacity payments to thermal IPPs keep climbing anyway, squeezing everyone else.
Then there’s the mess inside the distribution companies (DISCOs). The NEPRA doesn’t mince words: transmission and distribution (T&D) losses are still way over allowed thresholds, collection rates limp along, and load-shedding decisions often hinge on those very Aggregate Technical & Commercial (AT&C) losses rather than pure supply-demand math. These aren’t random glitches; they’re baked-in signs of weak institutions, heavy-handed political meddling, and almost zero real accountability. The report ties a good chunk of the ongoing Debt Service Surcharge straight to this mismanagement across the chain—and guess who ends up footing that bill? Regular consumers, through tariffs that keep edging higher.
Business voices have been shouting for years that these built-in distortions are killing industrial competitiveness. Cross-subsidies meant to shield domestic users have instead jacked up power costs for factories far above what competitors pay in Bangladesh, Vietnam, or even India. The result? Shrinking exports, shuttered plants, layoffs that ripple through communities. And hovering over everything is circular debt—the sector’s endless financial quicksand—that refuses to shrink meaningfully despite periodic “resolutions.”
All this clashes sharply with how Prime Minister Shehbaz Sharif keeps praising the power team in public. Maybe that’s why Federal Minister for Power Awais Leghari came out swinging against NEPRA’s findings, calling them built on “incomplete and inaccurate” numbers. He pushed back hard, saying circular debt hasn’t ballooned—it’s actually dropped from around Rs2.4 trillion to Rs1.6 trillion, a drop he calls historic. He pointed to a six-year roadmap to wipe it out completely and highlighted the cancellation of roughly 8,000 MW of pricey power projects as proof of serious cost-cutting.
But those claims deserve a closer, skeptical look. Scrapping projects that were mostly still on paper or early stages might look good in spreadsheets, but it doesn’t deliver real cash savings if the money was never actually spent. And brushing off load-shedding tied to commercial losses doesn’t square easily with NEPRA’s numbers, which are grounded in audited data rather than departmental optimism. The back-and-forth exposes a bigger issue: when performance stats become politicized, trust erodes fast in a sector that desperately needs impartial, transparent oversight.
On the borrowing front, the government did refinance about Rs1.25 trillion of expensive debt through commercial banks, capitalizing on the policy rate tumbling from 22% in 2022 down to 10.5% now. Smart financial housekeeping, no doubt—but it’s still just kicking the can. Refinancing covers symptoms; it doesn’t fix the underlying leaks—poor recoveries, excess capacity payments, governance rot—that keep piling up obligations eventually passed to consumers already hit hard by inflation and stagnant wages.
The minister also grumbled that the NEPRA had ignored data supplied by the Ministry of Energy. That complaint feels off-base. Bodies like the NEPRA aren’t supposed to be cheerleaders for the executive branch. Their whole point is independence: to watch over the sector objectively, shield consumers from unfair pricing, stop monopolistic overreach, and keep things honest. Undermining that role defeats the purpose.
Independent regulation matters hugely. It defends everyday users, enforces service standards, fosters genuine competition, and blocks corruption or cartel-like behavior. Clear rules and real accountability build confidence, attract serious investment, and lay the groundwork for stable, long-term growth. Any push to clip those wings threatens all of that.
Which brings us to the most worrying whispers lately: word that the government has finalized changes to the NEPRA Act 1997 that would shift the regulator under the direct administrative thumb of the Power Division. No firm official denial has come, which only fuels the anxiety. Handing oversight of the watchdog to the very ministry it’s meant to check would gut its credibility overnight. It would mark a step backward from open, rules-based governance—exactly when public faith in institutions is already threadbare.
Pakistan’s track record is clear: weakening checks and balances doesn’t magically solve crises; it just lets them fester until the eventual blow-up costs far more. Real, lasting change demands transparency, reliance on solid data, and genuine respect for independent bodies—not quick legislative fixes that concentrate power further.
Bottom line: NEPRA’s report isn’t just another critique—it’s a wake-up call that pretty speeches and selective stats won’t cut it anymore. These regulatory watchdogs exist to protect the public and impose discipline where it’s needed most. Clipping their independence now would be a serious mistake. The only path forward is honest accountability, structural fixes that actually bite, and rebuilding a power sector that stops bleeding money and starts reliably supporting jobs, industry, and ordinary life—without leaning forever on more loans and higher bills for everyone.