ISLAMABAD: More than three decades of power sector reforms have failed to restore confidence in Pakistan’s energy market, with persistent inefficiencies eroding economic growth, undermining consumer trust and aggravating financial stress, according to the National Electric Power Regulatory Authority (Nepra).
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In its flagship State of the Industry Report 2025, the regulator said Pakistan’s power chain — from generation to distribution — remained riddled with governance lapses and operational bottlenecks, with circular debt continuing to balloon despite renegotiations with independent power producers. The report also acknowledged that Nepra’s own regulatory powers had been diluted by administrative and legal hurdles.
Nepra estimated that distribution companies (Discos) contributed roughly Rs400 billion to circular debt through system losses and weak recoveries, while compliant consumers paid about Rs235bn in debt servicing surcharges during 2024-25 to offset inefficiencies rather than normal market costs. It warned that underutilised generation capacity and idle plants were producing heavy capacity payments, while transmission constraints blocked cheaper power from entering the grid.
The regulator said utilisation factors of thermal and nuclear plants averaged just 38.82 per cent, with the decommissioning of older units offset by new hydropower capacity additions. Persistent inefficiencies also undermined government efforts to reduce tariffs, as outdated public-sector plants — including Guddu and Neelum-Jhelum — kept overall generation costs elevated.
Coal-based power plants using Thar coal were also underutilised, with a utilisation rate of 67.23pc and supply delays impacting cost competitiveness. Meanwhile, the 4,000MW Matiari–Lahore HVDC line operated at only 35pc utilisation despite payments tied to full availability.
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Nepra described several Discos — including KE, Pesco, Hesco, Sepco and Qesco — as chronic underperformers, citing excessive losses, weak recoveries, prolonged load-shedding and widespread consumer dissatisfaction. It said corporate governance remained weak, with boards showing little interest in reform and accountability mechanisms proving ineffective due to lengthy appeals and diluted enforcement powers.