For most of the past decade, the energy sector has been the wound that Pakistani policymakers reopened every summer. Circular debt, expensive independent power producers, inefficient distribution companies, and a tariff structure that hit the consumer twice all combined to make electricity a national grievance. The reforms now in execution are not a clean break, but they are the most coherent attempt in years to actually treat the wound rather than dress it.
The headline tariff move is one consumers can feel. The cost of electricity has come down by 10.31 rupees per unit between June 2024 and June 2025, and 9.01 rupees per unit between March 2024 and April 2026. The industrial cross subsidy has been removed at 4.04 rupees per unit. The Bijli Sahulat package and the cut in the EV tariff from 71 rupees to 39 rupees have offered targeted relief to households, making the transition to cleaner mobility. The PTV fee, that quiet line item nobody quite understood, has been eliminated.
Behind these consumer-facing moves sit some hard-fought structural shifts. The government has settled or is in the process of settling 1,225 billion rupees of circular debt through a structured loan, an exercise that brings the sector closer to a workable cash flow rather than the perpetual moving target of unpaid bills.
The renegotiation of the IPP contracts is the line on the page that will pay dividends for years. 3.7 trillion rupees of savings have been booked from these renegotiations, with seven RFO-based IPPs terminated outright. Seventeen units of redundant GENCOs have been put up for auction. The Indicative Generation Capacity Expansion Plan, submitted earlier this year, is expected to save 17 billion dollars in capital expenditure and has already cut the average post-tax consumer burden by approximately one rupee per unit.
The institutional architecture has been overhauled. The Competitive Trading Bilateral Contract Market, the multi-buyer model that the country had talked about for the better part of a decade, has been operational since 22 January 2026. The Power Planning and Monitoring Company has been set up. The NTDC has been restructured around efficiency rather than scale. Professional boards are being appointed at the distribution companies, replacing a culture in which board seats were a parking lot for the politically connected.
On the distribution side, where Pakistan’s losses have historically been deepest, the picture is improving. The overall improvement runs to 193 billion rupees, with 45 billion rupees of that booked in FY 2025-26 alone. Distribution company efficiencies were the missing variable in every previous reform attempt, and they are finally being addressed at the operational level rather than through circulars.
Solar is no longer the side show it once was. Twenty-seven thousand tubewells have been solarised in Balochistan alone, a province where the cost of running diesel pumps had become a defining hardship of rural life. The net metering regime has been kept favourable for existing consumers, with the government holding to its payback guarantee for legacy installations. For new consumers, net billing continues to offer a reasonable return on investment, while off-grid consumers remain entirely unaffected by the regulatory adjustments.
The strategic fuel supply reserves are being built up, a lesson absorbed from the experience of the Strait of Hormuz shock. Pakistan kept four weeks of fuel reserves during the peak of that crisis, and the institutional intent now is to make that the floor rather than the ceiling.
There are still hard problems on the table. Transmission losses remain higher than they should be. The tariff structure, even after rationalisation, still carries the burden of legacy obligations that will take years to amortise. Privatisation of the distribution companies, with three expressions of interest expected in May 2026 and two more progressing, will be the test of whether the structural commitment holds against the inevitable political resistance.
What separates this round of reform from previous ones is the operational discipline behind it. The numbers are being reported, the contracts are being renegotiated rather than rolled over, and the institutional separations between policy, regulation, and operation are being respected in practice rather than only on the org chart. For a sector that broke the back of more than one previous reform attempt, that discipline is itself the story.
Copyright Business Recorder, 2026
The writer is an electrical engineer based in Lahore