Pakistan’s power sector liabilities stood at Rs9.2 trillion against assets of Rs8.4 trillion, resulting in negative equity of Rs800 billion during the last fiscal year as falling revenues, electricity theft and persistent losses at distribution companies eroded financial stability, The Express Tribune reported, citing an official annual performance report.
The negative equity was attributed to losses at power distribution companies (DISCOs), under-recoveries, electricity theft, generation cost re-pricing, circular debt and structural weaknesses in the sector’s business model.
To keep the sector operational, the government injected more than Rs1 trillion in subsidies during FY25, including Rs552 billion provided directly to DISCOs. Out of 10 power distribution companies, six remained loss-making during the year, which marked the first full fiscal year of the current government. However, four DISCOs returned to profitability, collectively posting Rs39 billion in earnings after reporting losses in the previous year.
Gujranwala Electric Power Company posted profits of Rs13.6 billion, while Tribal Electricity Supply Company earned Rs9.4 billion, largely supported by government subsidies. Faisalabad Electric Supply Company reported Rs9.6 billion in profit due to improved recoveries, while Multan Electric Power Company earned Rs4.5 billion after gains in collections, though theft remained a concern.
The remaining six distribution companies recorded combined losses of Rs258 billion in FY25, around one-fifth lower than the previous year. Their cumulative losses, however, reached nearly Rs3 trillion, accounting for close to half of the total losses of Pakistan’s top 25 state-owned enterprises.
Quetta Electric Supply Company emerged as the second-largest loss-making public entity after the National Highway Authority, posting losses of Rs113 billion during the year and cumulative losses of Rs825 billion, driven by weak recoveries and high theft.
Peshawar Electric Supply Company recorded losses of Rs93 billion, taking its cumulative losses to Rs764 billion, with the finance ministry citing systemic theft in its service area. Sukkur Electric Power Company incurred fresh losses of Rs25.4 billion, pushing total losses close to Rs500 billion.
Hyderabad Electric Supply Company reported losses of Rs13 billion, with cumulative losses rising to Rs460 billion due to high technical and commercial losses. Lahore Electric Supply Company posted losses of Rs12.7 billion, taking cumulative losses to Rs306 billion, while Islamabad Electric Supply Company incurred Rs1.4 billion in losses, increasing its total losses to Rs133 billion.
The report also showed that power sector revenues declined by 4% to Rs3.9 trillion, reflecting tariff delays and the impact of circular debt on cash recoveries.
Overall financial performance of state-owned enterprises deteriorated during the year, with net losses increasing by 300% and total fiscal support rising to Rs2.1 trillion, according to the Ministry of Finance.
To finance power sector losses, successive governments raised electricity tariffs and imposed a Rs3.23 per unit surcharge to service legacy debt, contributing to some of the highest energy prices in the region.
The government has announced plans to privatise power distribution companies during the current year, following the sale of a majority stake in Pakistan International Airlines after the removal of significant debt, a model that potential DISCO buyers may also seek.
Rising tariffs have accelerated the shift by residential, commercial and industrial consumers toward rooftop solar and alternative energy solutions, reducing grid demand despite official efforts to discourage off-grid consumption.
