Pakistan’s electricity supply companies caused a staggering Rs660 billion loss to the national exchequer in the last fiscal year ending June 30, 2024, according to a recent Dawn report. To put this in perspective, this amount is 11 times the federal government’s Rs59.7bn budget for higher education last year. This comparison starkly highlights the depth of the structural problems afflicting Pakistan’s power sector.
The inefficiencies of electricity supply companies are draining national resources, leaving little fiscal space for the government to invest in the economic welfare of Pakistan’s 241 million citizens. While the power sector reforms are underway, even the most optimistic policymakers acknowledge that eliminating these losses is unlikely in the near future.
The inefficiencies of power companies, which lead to significant annual financial losses, create a snowball effect on the economy. They add to the mounting circular debt, further constrain fiscal space, drive frequent energy price hikes, and hamper industrial production. This not only reduces output but also makes goods more expensive, exacerbated by prolonged power outages.
Among the worst affected are small and medium enterprises, small shopkeepers, and information technology (IT) freelancers — a crucial source of much-needed foreign exchange — who rely on uninterrupted electricity and internet services to work from home or modest offices.
