According to the government’s annual performance report, the sector’s equity turned negative by PKR 800 billion in fiscal year 2024–25. Due to declining electricity sales, line losses, power theft, and poor recovery, six out of ten distribution companies (DISCOs) continued to operate at a loss. The financial situation is extremely alarming.
Pakistan’s power sector has fallen into a severe financial crisis.
According to the government’s annual performance report, the sector’s equity turned negative by PKR 800 billion in fiscal year 2024–25. Due to declining electricity sales, line losses, power theft, and poor recovery, six out of ten distribution companies (DISCOs) continued to operate at a loss. The financial situation is extremely alarming.
The power sector’s total liabilities have reached PKR 9.2 trillion, while assets stand at only PKR 8.4 trillion, creating an overall equity gap of PKR 800 billion. According to the Ministry of Finance, the primary reasons include DISCO losses, electricity theft, circular debt, re-pricing of electric-generation companies (GENCOs), and an unsustainable business model.
To keep the system running, the government provided subsidies exceeding PKR 1 trillion.
Of this, PKR 552 billion was given to distribution companies alone, yet most institutions failed to emerge from losses. This fiscal year was the first full year of Prime Minister Shehbaz Sharif’s government. Some DISCOs showed paper profits.
Four DISCOs collectively reported profits of PKR 39 billion, including Gujranwala Electric (PKR 13.6 billion), Tribal Electric (PKR 9.4 billion), Faisalabad Electric (PKR 9.6 billion), and Multan Electric (PKR 4.5 billion). In reality, however, these profits were largely driven by subsidies. Losses are reduced through overbilling, effectively burdening the common consumer.
The remaining six DISCOs are facing losses at an alarming level.
These institutions incurred losses of PKR 258 billion in a single year, while cumulative losses have reached PKR 3 trillion. This is nearly half of the total losses of Pakistan’s top 25 state-owned enterprises.
Quetta Electric has become the biggest problem.
In just one year, it recorded a loss of PKR 113 billion, with cumulative losses rising to PKR 825 billion. According to the Ministry of Finance, poor recovery and rampant electricity theft are the main causes, representing a deep structural issue that successive governments have failed to resolve.
The power sector’s revenues are also declining. Revenue fell to PKR 3.9 trillion, a decrease of PKR 181 billion (4%), due to tariff delays and weakened recovery caused by circular debt.
The condition of other DISCOs is no different.
Peshawar Electric suffered losses of PKR 93 billion, Sukkur Electric PKR 25.4 billion, Hyderabad Electric PKR 13 billion, Lahore Electric PKR 12.7 billion, and Islamabad Electric PKR 1.4 billion.
To cover these losses, the burden has been shifted onto the public. The government increased electricity tariffs and imposed a surcharge of PKR 3.23 per unit, making electricity in Pakistan among the most expensive in the region.
Expensive electricity has damaged industry and investment.
According to Finance Minister Muhammad Aurangzeb, high energy costs and heavy taxation are forcing foreign companies to leave Pakistan, although some still remain interested in doing business in the country.
The public is now being forced to leave the grid. Residential, commercial, and industrial consumers are rapidly adopting solar and off-grid solutions. Despite government efforts, people are unwilling to rely on costly and unreliable electricity.
The conclusion is clear: this is not merely an electricity crisis, but a failure of governance, policy, and political economy. Unless theft, mismanagement, and the unsustainable model are fixed, the public will continue to pay for expensive electricity, and the system will keep weakening.
