EDITORIAL: Pakistan’s longstanding energy crisis is often framed as one of resource scarcity. The more uncomfortable reality is that it is also a crisis of waste, distorted priorities, and official inaction and incompetence. A recent LUMS Energy Institute event on ‘Pakistan’s Energy Security’ brought this into sharp focus, highlighting that the country spends a staggering Rs 3.5 trillion annually on energy imports, much of which could be avoided through better planning and more effective use of existing resources.
Consider the winter paradox. Pakistan imports around USD 2.7 billion worth of LNG over four months to meet domestic space and water-heating needs, even as much of its electricity-generation capacity lies idle. Installed generation capacity exceeds 36,000MW, yet base electricity load remained around 8,000MW between 2015 and 2023. This is an indictment of the abysmal planning that has characterised the energy sector, with those responsible seemingly oblivious to seasonal demand patterns and the need to align generation capacity with actual requirements. Such a glaring failure to anticipate and plan for foreseeable needs amounts to an almost criminal disregard for the economic cost of policy decisions. The country is left importing expensive fuel while paying for generation capacity it cannot fully utilise, further compounding capacity payments and circular debt.
The failure to enforce energy-conservation building codes is equally telling. A federal code approved in 2023 could cut cooling demand by up to 51 percent, according to research presented at the event, yet Punjab, Sindh, and Balochistan have still not adopted it. Improving the efficiency of just a quarter of residential buildings could shave 3,000MW off-peak demand and yield annual savings of Rs 442.6 billion. These are tangible gains being forfeited to administrative inertia.
The same inertia afflicts the power system. Transmission and distribution losses, inadequate investment in the grid and poorly governed DISCOs continue to undermine the sector. Electricity that can be generated is not necessarily delivered where it is needed. Circular debt mounts, consumers face high tariffs, and the state remains trapped in repeated bailouts and tariff adjustments. Privatising DISCOs, routinely presented as part of the solution, is hardly straightforward. Prospective investors will study K-Electric’s experience and think twice before entering a sector marked by policy uncertainty, payment disputes, and regulatory complications. Without credible governance and a predictable framework, selling these utilities will remain a tall order.
Nor can capacity payments be indefinitely sidestepped. IPPs are paid for available capacity regardless of how much electricity is dispatched. Given the scale of these payments, has an independent forensic audit ever rigorously reconciled declared capacity, actual availability, utilisation and contractual obligations? Honouring IPP contracts need not preclude scrutiny of the claims underpinning these payments or the public funds disbursed.
Pakistan has also lagged in developing indigenous energy resources, integrating renewables and reviving domestic manufacturing of transmission and distribution equipment. The LUMS research identified Rs 1.1 trillion in potential local manufacturing opportunities, yet a promised indigenisation plan remains unrealised. The consequences for all the missteps and inaction reach far beyond the energy sector. Pakistani businesses and industries face some of the region’s highest energy costs, driving up production expenses and eroding the competitiveness of exports. High energy costs thus constrain industrial growth, deter investment and limit employment.
What must be underscored is that seminars such as these are held with regularity, and the problems they explore are well-documented, their economic costs understood, and the remedies debated at length. Yet those entrusted with implementing them remain unwilling or unable to act while the energy crisis continues to exact a heavy toll on the wider economy. The evidence has been laid out once again. What is missing is not another diagnosis, but the political will to implement the solutions.
Copyright Business Recorder, 2026