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Pakistan Power Sector Sinks with ₹800B Negative Equity, Theft & Subsidies

Pakistan's power sector has plunged into deeper financial crisis, recording a negative equity of PKR 800 billion in the last fiscal year. The sector's total liabilities have surged to PKR 9.2 trillion, far exceeding its assets, driven by distribution losses, electricity theft, and a flawed business model. Despite over PKR 1 trillion in government subsidies, six out of ten distribution companies remained loss-making, with their cumulative losses reaching PKR 3 trillion. The crisis has forced tariff hikes, pushing power prices to record highs and driving away foreign investment, as acknowledged by the Finance Minister.

Key Points: Pakistan Power Sector Crisis: ₹800B Loss, Theft, Subsidies Drain Economy

  • Negative equity of PKR 800 billion
  • PKR 1 trillion in government subsidies
  • Six of ten DISCOs remain loss-making
  • Sector liabilities hit PKR 9.2 trillion
2 min read

Pakistan's power sector sinks further as losses, theft and subsidies drain economy

Pakistan's power sector posts negative equity of ₹800B as theft, subsidies, and DISCO losses cripple the economy. Shehbaz Sharif's government faces a fiscal crisis.

"soaring energy costs and taxes were driving foreign investors away - Finance Minister Muhammad Aurangzeb"

Islamabad, January 17

Pakistan's power sector plunged deeper into financial turmoil during the last fiscal year, posting a negative equity of Pakistani Rupees 800 billion, as shrinking electricity demand, chronic theft and persistent under-recoveries eroded the financial base of distribution companies, according to an official performance review, as reported by The Express Tribune.

According to The Express Tribune, the annual report revealed that the sector's total liabilities surged to PKR 9.2 trillion, far exceeding assets of PKR 8.4 trillion. Officials attributed the widening gap to distribution company losses, electricity theft, costly re-pricing by generation firms, circular debt and a structurally flawed business model.

To prevent a complete breakdown, the government injected more than PKR 1 trillion in subsidies during FY2024-25, including PKR 552 billion for distribution companies alone. Despite this massive fiscal support, six out of ten DISCOs remained loss-making, marking a troubling start to the first full fiscal year of Prime Minister Shehbaz Sharif's administration.

Only four distribution companies managed to return to profitability, collectively earning PKR 39 billion. Gujranwala Electric Power Company topped the list with PKR 13.6 billion, followed by Tribal Electricity Supply Company at PKR 9.4 billion, largely due to subsidy inflows. Faisalabad Electric Supply Company recorded PKR 9.6 billion after improving collections, while Multan Electric Power Company posted PKR 4.5 billion, although theft remains a concern.

In contrast, the remaining six DISCOs posted combined losses of PKR 258 billion last year. Their cumulative losses have now ballooned to PKR 3 trillion, nearly half of the total losses incurred by Pakistan's top 25 state-owned enterprises. Quetta Electric Supply Company emerged as the second-biggest loss-maker after the National Highway Authority, with PKR 113 billion in annual losses and cumulative deficits of PKR 825 billion, driven by weak recoveries and rampant theft. Sector revenues also declined to PKR 3.9 trillion, a drop of PKR 181 billion, as tariff delays and circular debt squeezed cash flows, as cited by The Express Tribune.

The worsening health of state-owned enterprises has forced successive governments to hike electricity tariffs and impose a PKR 3.23 per unit surcharge, pushing power prices to record regional highs. Finance Minister Muhammad Aurangzeb acknowledged this week that soaring energy costs and taxes were driving foreign investors away, as reported by The Express Tribune.

- ANI

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Reader Comments

S
Sarah B
The data is shocking but not surprising. Electricity theft is a huge problem in many developing nations. In India, we've made progress with schemes like SAUBHAGYA and smart meters, but it's a continuous battle. Pouring subsidies into a broken system without fixing the core issues—theft, collections, circular debt—is just throwing good money after bad. A lesson for all.
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Arjun K
Feel for the common people there. When the power sector sinks, everything else does too—industries, jobs, daily life. The finance minister admitting it's driving investors away says it all. Stability in basics like electricity is non-negotiable for any economy to grow. 🇮🇳
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Priyanka N
Only 4 out of 10 DISCOs profitable even after a trillion rupees in subsidies? That's a failed model. The article mentions "structurally flawed business model" – that's the key phrase. You can't subsidise your way out of a structural problem. Needs complete overhaul, not just bailouts.
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Karthik V
Respectfully, while we critique, we should also look inward. Our discoms aren't exactly shining examples of efficiency either. We have our own challenges with AT&C losses. This news should be a reminder for us to double down on reforms, privatisation where possible, and better governance. Jai Hind.
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Michael C
The numbers are staggering. PKR 3.23 per unit surcharge on top of already high tariffs? It will crush small businesses and households. Economic development becomes impossible with such unreliable and expensive power. A very tough situation for their new government to

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