An integrated energy rethink

EDITORIAL: The government’s approval of amendments to the National Electricity Plan (NEP) 2023-27 and the high-level design report of the Integrated Energy Plan (IEP) 2027-60 on August 18 is a long overdue recognition that Pakistan’s energy crisis cannot be solved by treating electricity, gas, petroleum and other energy sources as separate policy silos. The first plan offers a relatively immediate roadmap; the second seeks to impose a longer-term, cross-sectoral framework. Both will ultimately be judged by whether they can fix a power sector that has been malfunctioning for decades.

Even a brief overview of power sector performance will tell us that while successive governments have invested heavily in adding generation capacity, there have been few meaningful efforts to address the structural weaknesses of the distribution system. High transmission and distribution losses, electricity theft, poorly performing distribution companies, weak governance and inadequate investment in networks have prevented power from reaching paying consumers efficiently. The result has been a vicious cycle of inefficiency, rising tariffs, suppressed demand and mounting circular debt, now running into trillions. For households, particularly lower-income consumers, electricity has become increasingly unaffordable. Industry and businesses face a similar dilemma: exorbitant energy costs have undermined competitiveness, with Pakistan’s industrial sector facing some of the highest cost structures in the region, thanks to the combination of expensive electricity, costly imported fuels and an inefficient energy system. This has had the knock-on effect of making investments in productive activity more difficult, rendering Pakistani businesses increasingly uncompetitive in export markets. Meanwhile, the inordinate dependence on imported fuels exposes the economy to international price shocks and puts additional pressure on the external account.

The proposed plans attempt to address several of these longstanding weaknesses. The NEP amendments envisage expansion of generation and transmission, renewable electricity for remote areas, improved market and system operations, tariff reform, energy conservation, digitisation and better risk management. The longer-term IEP is more ambitious, bringing federal and provincial governments and energy sector stakeholders under one framework, with its four broad objectives of energy security, economic competitiveness, equity and environmental sustainability providing a coherent basis for aligning energy policy with Pakistan’s broader economic and development priorities. Needless to say, this integrated approach should have come much earlier. Pakistan needs to extract greater value from its indigenous energy resources while expanding renewables, storage and other emerging technologies. It must also ensure that future investments are based on a coherent assessment of demand, fuel availability, transmission requirements and economic returns rather than the fragmented planning that has characterised the sector for years. Better coordination could prevent costly duplication and curb politically expedient investments that later become financial liabilities.

The real challenge, however, begins after approval. Pakistan has no shortage of policies, plans and reform blueprints. Its problem has been weak implementation, institutional fragmentation and the political difficulties associated with enforcing far-reaching reforms. Reducing T&D losses, for instance, requires confronting theft, improving DISCO governance and holding managements accountable for performance. Tariff reform must address inefficiencies without simply transferring the cost of a dysfunctional system to consumers. And greater reliance on renewable energy must be accompanied by investment in transmission, storage and grid flexibility. The proposed framework must therefore have measurable targets, clear institutional responsibilities and regular public reporting. Provinces, regulators and federal agencies must be brought into the process as fully accountable partners.

The opportunity here is significant. An integrated energy policy could help Pakistan move from managing recurring crises to building a more secure, affordable and resilient energy system. But no plan, however far-reaching, will achieve much if implementation remains half-hearted, fragmented or hostage to turf wars or political expedience. The test, therefore, is whether this time Pakistan can turn planning into performance.

Copyright Business Recorder, 2026