Atif Mehmood | Published July 25, 2025
The author is deeply interested in social and political issues, focusing on analyzing their impact on society and policy development. It is to be noted that the opinions articulated herein are exclusively the author’s own and do not reflect the views or stances of the author’s employer or those of Pakistan Chronicles Online. For correspondence, the author may be contacted at atif@live.ie.
During the summer, when generators hum and hope flickers, an old adversary takes shape each evening: load‑shedding. Lives dim and patience frays as households endure eight to twelve hours of blackout in cities, and up to eighteen in rural areas. The nation complains less of absence than of injustice, bearing witness to the hum of idle capacity just beyond the switch.
Installed generation capacity reached some 46,000 megawatts by March 2025. Yet electricity generated last year barely touched 127,500 gigawatt‑hours. Despite ample capacity, only a paltry 10,000 MW of dependable supply flowed, betraying the illusion of abundance. Capacity payments paid to independent producers regardless of output have ballooned to nearly two trillion rupees and form the hollow backbone of the crisis. The system sustains itself on promise, not power.
Circular debt, itself a monument to structural failure, now exceeds Rs 2.3 trillion. Tariff subsidies remain unpaid; bills go uncollected or are evaded; theft and financial mismanagement remain endemic. Consumers bear not only the burden of darkness but the weight of inefficiency masquerading as petrol‑price adjustment. This mounting debt represents a fiscal sword dangling perilously over the everyday speaker and starving family alike.
The government, supported by its IMF programme, began renegotiating wind and solar contracts last year to address consumer tariffs. These negotiations, reportedly conducted with the involvement of security officials, received criticism from international lenders. The IFC, ADB, and several other organisations stated that applying pressure on private investors could reduce investor confidence and affect clean energy development. Wind and solar energy are currently at the centre of discussions regarding contract terms and public interest.
Despite challenges, solar sector nearly doubled to 5.3 GW in 2025, making it the leading source of new power. Renewables now account for over a quarter of the country’s generation capacity, with both urban and industrial users adopting rooftop solar. Large-scale solar farms have also expanded rapidly in Punjab and Sindh, demonstrating innovation driven by necessity.
This unexpected solar boom underscores how market‑based reform must now take root. Pakistan has broken solar records not through grand policy but through household choice. But to translate choice into continuity, the power market must be restructured to marry demand and supply with fiscal clarity and governance integrity.
The government plans to quickly establish a Competitive Energy Market, breaking up the National Transmission & Despatch Company into three parts. An independent market operator will manage real-time supply and demand, aiming to reward efficiency.
However, for reforms to work, contracts with IPPs need transparent renegotiation, capacity payments should reflect actual output, and billing reform must be strictly enforced. Reducing distribution losses now over 25 percent requires prepaid meters, audits, and better infrastructure. Without these steps, market reform will not be effective.
Above all, the torrent of debt requires resolution. Pakistan is nearing a $4.47 billion commercial loan deal to restructure energy debt and shift toward a consumption‑based revenue model. The aim is to lifeline the sector over five to seven years, not merely through subsidy roll‑overs, but through true financial discipline. Yet debt relief alone cannot restore trust; meaningful governance must fill the vacuum.
For consumers, reform must deliver two gifts: reliability and affordability. That means tariff rationalisation, yes, but also meaningful support for low‑income households in the form of lifeline tariffs and solar net‑metering subsidies. The state has begun pilot schemes subsidising solar pumps for farmers and subsidised panels for low‑income urban households, these must be scaled, not shelved.
For investors, Pakistan must reaffirm the sanctity of agreements while rising to renegotiate unsustainable terms. Climate funding through the IMF's Resilience Trust can anchor such reform, provided contractual clarity is restored. The message must be, Pakistan welcomes capital, but not coercion. Investors must be invited by fairness, not forced by threats.
Pakistan’s energy predicament has drawn weary parallels to a ship weighed by its own provisions: full of potential, yet unable to move. Energy market reform must right that vessel. Market design should incentivise both renewable capacity and real demand. It should bind consumers, citizens, and capital under shared responsibility. It must root tariffs in real value, not cross‑subsidy illusion.
The litany of disruption, industries halting, hospitals running on generators, children studying by dim lamp must become the driving force for change. The roar of load‑shedding is not a lament; it is a call to action.
The cities and farms cannot wait for the seasons to change. Its businesses cannot bear another year of idle turbines. Its people cannot endure another election of empty promises. The energy future must be reimagined not as finance alone, but as dignity restored.
Let reform be more than resolution, it must become reflection. A nation rich in capacity, finally matching its promise. A market where power flows as surely as water. A people no longer living in the margin of darkness, but in the steadfast glow of ambition fulfilled.
Reprinted with courtesy of The Business. All rights reserved.
© 2024 Pakistan Chronicles Online. All Rights Reserved.
The content posted in pakistanchronicles.online community pages is created by members of the public. Hence, views expressed therein may not be those of pakistanchronicles.online. pakistanchronicles.online is not responsible for any content posted by members of the public on pakistanchronicles.online. Ensure to view Disclaimer section of this website for mor information.
