Despite recent reforms, Pakistan’s power sector continues to face significant challenges, including underutilization of generation capacity, inefficiencies, and rising costs. According to a report by the Pakistan Credit Rating Agency (Pacra), the country’s installed power generation capacity reached 45,888 megawatts (MW) in FY24, but only 33.9% of this capacity was utilized.
The report highlights several key issues, including:
- Inefficiencies in generation, transmission, and distribution, leading to increasing capacity payments and higher consumer tariffs.
- Low recovery rates among distribution companies (Discos), pushing consumers towards distributed generation, particularly rooftop solar installations.
- Regulatory non-compliance and governance issues among power suppliers, exacerbating the financial burden on the sector.
- Excessive supplementary charges, making renewable energy sources, such as solar power, more attractive to consumers.
To address these challenges, the government is focusing on expanding renewable energy sources, particularly solar power, and promoting indigenous energy sources, such as hydropower and Thar coal. The report forecasts a significant shift towards renewable energy sources, with hydropower, wind, and solar energy projected to account for 59% of total power generation by 2031.
Key Statistics:
- Installed power generation capacity: 45,888 MW (FY24)
- Capacity utilization: 33.9% (FY24)
- Fuel costs for government-owned power plants: Rs33.6 per kilowatt-hour (kWh)
- Projected share of renewable energy sources in power generation by 2031: 59%
