World Bank Urges Comprehensive Reforms as Pakistan’s Energy Sector Circular Debt Reaches Rs5.5 Trillion


Despite efforts to address billing defaults and theft, Pakistan’s power and gas circular debts have surged, reaching Rs5.5 trillion by January, as reported by the World Bank. The bank emphasizes the need for more extensive reforms to align tariffs with the true cost of supply. Structural issues, subsidies, and inefficiencies have led to significant deficits, affecting supply reliability.

The World Bank calls for continued tariff reforms to tackle mounting circular debt in the electricity and gas sectors. It notes improvements but highlights that the pace of debt accumulation remains a concern. The bank suggests addressing inefficiencies within state-owned distribution companies, reducing dependence on imported fuels, and increasing the share of renewable energy to curb debt growth.

Pakistan’s potential in hydro, solar, and wind power is acknowledged, but challenges like seasonal demand variations need attention. The World Bank stresses the importance of simultaneously expanding and strengthening the transmission grid for effective renewable energy deployment.

Story by Khaleeq Kiani

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