Pakistan’s power sector currently faces a severe crisis owing to multiple reasons, right from generation to transmission and distribution. Circular debt is at its peak and apparently seems insurmountable.

This sector has never been in such bad shape as it is today. Inefficiencies, political interference, and outdated infrastructure, along with soaring fuel costs, are some of the problems being faced by the sector. The root cause of this crisis lies in the inconsistent policy framework, which changes from time to time, and allied governance issues.

Independent power producers (IPPs) have marred the system, making it impossible for ordinary Pakistanis to pay their dues, especially due to their ever-increasing capacity charges. These charges have touched the Rs2.5 trillion figure, which is the main reason for a hike in electricity charges. The IMF programme also emphasizes reducing circular debt by reforming the power sector, for which necessary steps need to be taken by the Ministry of Power.

Power generation companies (Gencos) and distribution companies (DISCOs) need to undertake reforms at the earliest, right from their infrastructure development to distribution losses and theft, which is common in far-flung rural areas. The National Transmission and Despatch Company (NTDC) also needs to be reformed, as it cannot take on the load of the installed generation capacity due to its old infrastructure.

Inconsistent power policies have made a mess. The 1994 Power Policy introduced the concept of IPPs, affecting electricity tariffs due to fluctuating oil prices in the international market. The departure from hydel power development was the first unfortunate step towards creating difficulties for people, as we had the potential to create cheap hydel power by building dams in Pakistan.

The second power policy, in 1998, introduced competitive bidding among IPPs along........

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