Issue Brief on “Pakistan’s Energy Crisis: Challenges and Path Forward”

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Introduction: Understanding the Current Energy Landscape

Pakistan is grappling with a multifaceted energy crisis, compounded by political instability and economic stagnation. The country’s power sector, a significant contributor to the ongoing crisis, faces inefficiencies that have escalated electricity costs well beyond what many citizens can afford. Public protests over the surging electricity prices reflect the discontent felt by the masses, with economic imbalances deepening due to a growing reliance on external debt.[1] Amid these challenges, Independent Power Producers (IPPs) play a key role in determining the future of Pakistan’s energy sector. With circular debt in the power sector rising to Rs 2,310 billion in May 2024, and payments to IPPs nearing Rs 1,800 billion,[2] the inefficiencies, mismanagement, and lack of transparency in the sector need urgent redressal and reform.

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