There is a number that stalks Pakistan like a curse — so large that it drowns our ambitions, mocks our sovereignty, and keeps our ministers flying from one capital to another with begging bowls in hand. That number is the circular debt, the black hole of the power and gas sectors that has turned a proud nation into what our own Prime Minister has called a “global begging bowl.”
Now comes the IMF, with its latest Governance and Corruption Diagnostic Assessment: Pakistan, November 2025 — a document as cold as it is damning. It reads less like an economic analysis and more like a postmortem of a failed state. It does not speak in the language of diplomacy or caution; it presents the unvarnished truth that Pakistan’s energy crisis is not a natural disaster, not bad luck, but a man-made crime scene — the outcome of political patronage, regulatory decay, and a state captured by its own elites.
The fundamental rot begins at the very top — in how we appoint the supposed guardians of our energy sector. It is said that members and chairmen of NEPRA and OGRA are not chosen for merit or competence but for their connections. Every time a chairman’s term expires, there’s no search for better talent; there’s simply another extension, another nod to political loyalty in OGRA, particularly. These regulators were meant to protect the public interest, but over time, they seem to have become shields for the powerful and accomplices in the looting of the exchequer. The tragedy is that this has become so normal, so routine, that no one even flinches anymore.
The IMF report is a rude awakening, a slap across the face of the comfortable narrative that our problems are technical or administrative. They are not. They are moral and political. In just three fiscal years, says the report, over one trillion rupees in direct bailouts has been poured into the Power and Petroleum Divisions — not to improve performance, but simply to stop the bleeding.
Every year, supplementary grants — funds that bypass parliamentary approval — are released like emergency blood transfusions to keep a dying patient alive. In FY2023-24, every single rupee of these supplementary funds went to the power and petroleum sectors. In 2021-22 it was 30 percent; in 2020-21 it was 57 percent. It is a parallel budget — a secret economy run by the powerful few, accountable to none.
This is not fiscal management; it is fiscal madness. It is money that should be building schools and hospitals, being thrown into an endless pit to feed a corrupt and collapsing system. The IMF calls this out plainly: these grants “undercut the core principle that expenditure should reflect the will of the Legislature.” But then, when was the will of the Legislature ever more than a rubber stamp?
At the heart of this disaster are the state-owned enterprises — the DISCOs and gas companies — now little more than vehicles for political protection and patronage. The IMF notes that federal SOEs reported a net loss of 30 billion rupees in 2024 despite over 13 trillion rupees in revenue. This isn’t inefficiency; it’s theft institutionalized. The powerful consume electricity and gas without paying a paisa, confident that the state will pick up the tab. The result is predictable: the distributors can’t pay the generators, the generators can’t pay the fuel suppliers, and the circle of debt spins faster and faster, devouring everything in its path.
To make matters worse, the regulators themselves have been hollowed out. In OGRA, one official can hold both the posts of Member Oil and Member Gas — a neat little arrangement that erases checks and balances and ensures that oversight becomes a polite fiction. Who grants these extensions? Who allows these mergers of power and privilege? It’s a small club, and its members all know each other. Nepra fares no better — tariffs are set not on the basis of economic reality but political expediency, designed to keep the voter quiet until the next election.
Meanwhile, the government continues to pile up guarantees — 3.4 trillion rupees’ worth, according to the IMF — mostly to the power sector. These are ticking time bombs, contingent liabilities that could explode at any moment. When they do, the same cycle will repeat: another round of frantic negotiations, another loan, another bow before the IMF. We are no longer partners in reform; we are patients kept alive by external drips.
Even the much-touted Special Investment Facilitation Council, the new darling of Islamabad’s reform narrative, doesn’t escape the IMF’s wary eye. The report politely warns that its “broad immunity” could “increase potential transactional risks” — translation: this too could become another playground for rent-seekers unless transparency is absolute. We love new acronyms, but we detest accountability.
So here we are again, dissected and diagnosed by an international lender that sees our problems more clearly than we dare to. The IMF doesn’t just ask for economic reform; it pleads for basic sanity. Stop the secret grants. Enforce the SOE law. End political interference in regulatory bodies. Price energy realistically. Punish theft — no matter whose factory or mansion is behind it.
But all this requires something we seem to have misplaced: courage. Because reform means breaking the very networks that sustain power in this country. It means telling the truth to friends and allies, not just to the poor who already pay for everyone else’s crimes.
The circular debt is not a technical glitch. It is the sum of our dysfunction, the mirror image of our governance. It is why we cannot educate our children, why our hospitals crumble, why the world looks at us with pity instead of respect. The IMF has given us the latest diagnosis — fact-based, data-backed, and brutally honest. The medicine is bitter, but the choice is simple: swallow it, or keep extending our hands for alms until even the donors look away.
If there is any shred of dignity left, this is the moment to choose — live forever on bailouts or finally rise on our own feet. But knowing our habits, the bowl will likely be polished again for another round abroad. Real reform begins by dismantling the farce of Nepra and Ogra — two regulators that regulate nothing. Replace them with transparent, technology-driven oversight — even Artificial Intelligence would serve the nation better. Do that, and Pakistan’s economic trajectory will finally align with its potential, because no nation can prosper when its energy sector remains a monument to corruption.
Copyright Business Recorder, 2025
The writer is water and climate change expert, is co-founder of Energy Excellence Centres at NUST and UET Peshawar