ISLAMABAD: The World Bank has stressed the urgent need for a credible marginal price determination mechanism in Pakistan’s power sector, supported by transparent data, robust systems and independent oversight, as the country faces mounting structural challenges stemming from rapid solarisation and persistent circular debt.
The issue was discussed during a meeting between World Bank Country Director Bolormaa Amgaabazar and Federal Minister for Power Sardar Awais Leghari, where both sides reviewed ongoing World Bank–supported projects and broader reform efforts in the power sector.
The meeting also provided an opportunity for the government to acknowledge the World Bank’s analytical and technical support, particularly its engagement in power sector reform discussions under the International Monetary Fund (IMF) programme.
Reiterating the government’s commitment to reform, the Power Minister highlighted key initiatives, including privatisation of power distribution companies (DISCOs), competitive procurement of electricity, and measures aimed at restoring investor confidence.
However, he cautioned that the rapid growth of off-grid and on-grid solar capacity—estimated at around 25,000 megawatts—has sharply increased fixed-cost pressure on the national grid. This, he warned, is heightening the risk of grid defection, a trend likely to accelerate further with the expanding adoption of battery storage systems.
“Without tariff stabilisation, future policy responses could inadvertently discourage renewable energy deployment,” the minister cautioned.
The two sides also discussed a proposed financing plan involving international financial institutions to retire the remaining circular debt of about Rs1.7 trillion, a long-standing issue undermining the financial sustainability of Pakistan’s power sector.
Sardar Awais Leghari said the World Bank could play a critical role in encouraging local investment in battery storage, describing it as vital for improving energy efficiency and ensuring grid stability amid changing consumption patterns.
He added that Pakistan is currently developing dozens of power sector projects, some of which are experiencing delays. World Bank teams, he noted, regularly visit Pakistan to review progress, particularly on hydropower, transmission and distribution initiatives.
The Power Minister acknowledged the World Bank’s continued technical assistance and underscored the importance of expanding collaboration through future projects to accelerate reforms and strengthen Pakistan’s energy infrastructure.
On the occasion, World Bank Country Director Bolormaa Amgaabazar praised the government’s reform agenda and reaffirmed the Bank’s commitment to supporting efforts aimed at building a sustainable, reliable and financially viable energy sector.
The meeting underscored the shared resolve of Pakistan and the World Bank to deepen cooperation in the power sector while exploring new avenues for investment and technical collaboration.
Story by Mushtaq Ghumman
