Pakistan's Power Crisis Deepens: Huge Bills Amid Blackouts

According to media reports emanating from Pakistan, the mess is due to misgovernance, corruption, underinvestment, and unpredictable policy.

The power sector's credibility is at its lowest point as even several policy resets have not been able to correct the situation. So, it is no surprise that whatever financial gains the state extracted from private power producers through coercion and renegotiation were quickly swallowed by deep-seated inefficiencies elsewhere in the system, according to an article in Dawn.

Numerous policy interventions, unbundling and corporatisation of state-owned enterprises (SOEs), and private investments in generation notwithstanding, the sector continues to face challenges that constrain its efficiency and undermine its role in national economic growth, instead of providing relief to consumers across different categories.

Electricity remains unaffordable, supplies patchy and a big portion of generation capacity idle, with consumers forced to underwrite losses stemming from systemic failure. The scale of the sector's challenges and their implications for consumers is reflected in the fact that the distribution companies have added some Rs 400 bn (Pakistan's currency) to the circular debt, while consumers paid about Rs 235 bn in debt servicing surcharge during the last fiscal year because the sector's inefficiencies have been allowed to persist and cascade across the supply chain -- from generation to transmission to distribution, the article laments.

Regulatory powers have been steadily eroded through administrative interference and prolonged litigation, rendering enforcement actions slow, reversible and largely symbolic. The article points out that since the power sector is plagued by weak governance and lack of accountability it cannot be fixed through pricing tweaks and contract revisions.

The sector does not suffer from a lack of actionable plans for reform. What it needs is political will to execute those reform plans, improve governance and accountability, end policy uncertainty and strengthen the regulator, the article added.

- IANS