The National Electric Power Regulatory Authority has released a hard hitting assessment of Pakistan’s power sector, highlighting persistent inefficiencies despite repeated structural and policy level reforms. The report points to renegotiated Independent Power Producer contracts that continue to burden consumers through capacity payments, while contracts signed under the China Pakistan Economic Corridor remain unchanged. These obligations have intensified financial pressure as the government expanded solar adoption to meet climate resilience goals.

Nepra observed that power distribution companies remain plagued by weak governance. Transmission and distribution losses continue to exceed permissible limits, bill recovery remains poor and load shedding is still linked to aggregate technical and commercial losses. The report also linked rising electricity tariffs to the debt service surcharge, noting that inefficiencies across the sector are being passed directly to consumers.

Industry stakeholders have expressed concern that cross subsidies have pushed energy costs well above regional averages, making Pakistani exports less competitive. Nepra further warned that circular debt has continued to rise, deepening structural weaknesses and threatening long term sector sustainability.

The findings have drawn sharp criticism from the government. Power Minister Awais Leghari rejected the report, calling it incomplete and inaccurate. He claimed circular debt has fallen from 2.4 trillion rupees to 1.6 trillion rupees and said the government is implementing a six year plan to eliminate it. He also cited the cancellation of 8000 megawatts of costly projects as a major policy success.

However, analysts note that the government has borrowed 1.25 trillion rupees from commercial banks at lower interest rates to retire earlier high cost loans. While refinancing provides short term relief, the burden ultimately remains on consumers, reflecting continued operational failures rather than genuine reform.

The report has renewed concerns over proposed amendments to the Nepra Act that could place the regulator under the Power Division. Experts warn that weakening regulatory independence would undermine consumer protection and market transparency. Nepra’s autonomy, they argue, is essential to restoring trust and steering the power sector toward long term stability.