Power sector: World Bank urges need for credible marginal price determination

ISLAMABAD: The World Bank has underscored the need for credible marginal price determination in Pakistan’s power sector, backed by transparent data, robust systems, and independent scrutiny, as the country grapples with mounting structural challenges driven by rapid solar adoption and persistent circular debt.

The issue was discussed during a meeting between World Bank Country Director Bolormaa Amgaabazar and Minister for Power Sardar Awais Leghari, where both sides reviewed ongoing World Bank–supported projects and reform efforts in the power sector.

The meeting also served as an opportunity for the government to express appreciation for the World Bank’s analytical support, particularly its engagement in power sector reform discussions under the IMF programme.

READ MORE: Pakistan seeks US support to engage IMF, World Bank on energy reforms

Reaffirming the government’s commitment to reforms, the Minister highlighted key initiatives including DISCO privatisation, competitive procurement, and measures to strengthen investor confidence.

However, he cautioned that the rapid expansion of off-grid and on-grid solar capacity—estimated at around 25,000 MW—has significantly increased fixed-cost pressure on the national grid. This trend, he noted, is accelerating the risk of grid defection, which could intensify further with the growing adoption of battery storage systems.

“Without tariff stabilisation, future policy responses may unintentionally discourage renewable energy deployment,” the Minister warned.

Both sides also discussed a proposed financing plan involving international financial institutions to retire the remaining circular debt of Rs 1.7 trillion, a long-standing challenge undermining the financial viability of the power sector.

Sardar Awais Leghari emphasised that the World Bank could play a pivotal role in promoting local investment in battery storage, which he described as essential for improving energy efficiency and ensuring grid stability amid changing consumption patterns.

He further noted that Pakistan is currently developing dozens of power sector projects, some of which are facing delays. World Bank teams, he added, regularly visit Pakistan to review progress, particularly on hydropower, transmission, and distribution projects.

The Power Minister acknowledged the World Bank’s technical assistance and stressed the importance of expanding collaboration through future projects to accelerate reforms and strengthen Pakistan’s energy infrastructure.

On the occasion, the World Bank Country Director praised the ongoing reform efforts and reaffirmed the Bank’s commitment to supporting initiatives aimed at sustainable, reliable, and financially viable energy development.

The meeting highlighted the shared resolve of Pakistan and the World Bank to deepen cooperation in the energy sector while exploring new avenues for investment and technical collaboration.

Copyright Business Recorder, 2026