ISLAMABAD: Despite over 35 years of ‘reforms’ and policy interventions, Pakistan’s power sector remains incapable of instilling confidence in the country’s economic growth and in consumers’ trust, leading to gains secured from power producers through renegotiations evaporating amid unending inefficiencies.

This charge sheet has been framed by the National Electric Power Regulatory Authority (Nepra) against the policymakers and power sector managers in its flagship ‘State of the Industry Report 2025’, while conceding that regulatory powers for correction had been diluted through administrative and legal challenges.

It said the inefficiencies of the distribution companies (Discos) contributed around Rs400 billion to the circular debt, while law-abiding consumers paid around Rs235bn in debt servicing surcharge (DSS) in 2024-25, not due to normal business practices but to inefficiencies.

It said that despite some structural and policy-level interventions, “overall progress remained limited and insufficient to instil confidence in its ability to drive sustained industrial growth and provide meaningful relief to electricity consumers across industrial, commercial, agricultural, and residential categories. The sector continues to face deep-rooted operational and governance challenges that constrain its efficiency and undermine its potential contribution to economic development”.

Nepra report says inefficiencies continue to fuel circular debt

It pointed out that underutilised generation capacity was resulting in a persistent financial burden in the form of capacity payments for idle plants, and the transmission network is both underutilised and constrained, contributing........

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