Pakistan Institute of Development Economics

P & R Vol.2 Issue 5
Fixing power sector issues
Publication Year : 2021

The webinar highlights challenges in the power sector and identifies solutions to these challenges. High circular debt equivalent to 42% of Pakistan’s tax revenue per annum; it is rising by Rs. 500 billion annually. Poor governance of the DISCO’s is one of the primary reasons for the circular debt. The government is not going to the sources of the problem, instead chooses for temporary fixes and bail out the inefficient DISCOs; while consumers are bearing the financial burden. Besides, there is excess generation capacity in the country not because of low demand but because of revenue based load shedding of about 5000 MW in several areas. Experts suggested bringing DISCOs in the retail business along with other competitors from the private sector. However, competition should not be allowed without looking at the dynamics of the city. For introducing competition, rules have to be fair. If any competitor comes, for instance, in Karachi, it should provide services to the high loss areas as well. Otherwise, the government should provide electricity services in high loss areas and allow competition in better performing areas.