Pakistan dealing with new crisis: Power sector slides further as losses, theft and subsidies hurt economy

Islamabad: Bankrupt Pakistan, which is already dealing with an economic crisis, is facing a new threat as the power sector sank further into financial trouble last fiscal year. The sector recorded a negative equity of PKR 800 billion due to falling electricity demand, major theft and continued under-recoveries, according to an official performance review.

What Did The Annual Report Say?

The annual report revealed that the sector’s total liabilities surged to PKR 9.2 trillion, far exceeding assets of PKR 8.4 trillion. Officials attributed the widening gap to distribution company losses, electricity theft, costly re-pricing by generation firms, circular debt and a structurally flawed business model.

To prevent a complete breakdown, the government injected more than PKR 1 trillion in subsidies during FY2024-25, including PKR 552 billion for distribution companies alone. Despite this massive fiscal support, six out of ten DISCOs remained loss-making, marking a troubling start to the first full fiscal year of Prime Minister Shehbaz Sharif’s administration.

Four Distribution Companies In Profit

Only four distribution companies managed to return to profitability, collectively earning PKR 39 billion. Gujranwala Electric Power Company topped the list with PKR 13.6 billion, followed by Tribal Electricity Supply Company at PKR 9.4 billion, largely due to subsidy inflows. Faisalabad Electric Supply Company recorded PKR 9.6 billion after improving collections, while Multan Electric Power Company posted PKR 4.5 billion, although theft remains a concern.

Six Power Distribution Companies Reported Losses

• The remaining six power distribution companies (DISCOs) reported losses of PKR 258 billion in 2025. Their cumulative losses were PKR 3 trillion—almost half of the total losses suffered by the neighbouring country’s 25 largest state-owned enterprises.
• Quetta Electric Supply Company became the second-largest loss making company after the National Highway Authority. The company recorded annual losses of PKR 113 billion and cumulative losses of PKR 825 billion. The reason was poor recoveries and major electricity theft.
• According to the report, overall sector revenues declined to PKR 3.9 trillion, a decrease of PKR 181 billion.
• The deteriorating financial health of state-owned companies has forced governments to raise electricity tariffs and imposed a surcharge of PKR 3.23 per unit. This has pushed power prices to record highs.
• Finance Minister Muhammad Aurangzeb recently admitted that rising power costs and heavy taxation are discouraging foreign investment.

(with ANI inputs)