Pakistan’s energy sector consistently dominates headlines, from contentious Independent Power Producer (IPP) contract re-negotiations to the transformative potential of the emerging solar revolution. The nation’s power landscape, marked by persistent circular debt and reliability challenges, exemplifies how energy infrastructure can fundamentally shape a country’s economic trajectory.
The critical link between economic stability and a robust power sector is well recognized by policymakers and international institutions like the International Monetary Fund (IMF), which has made power sector reforms a cornerstone of its support programs for Pakistan.
However, high-level policy discussions often overlook the complex dynamics that shape Pakistan’s power sector challenges, reducing multifaceted issues to simplified narratives about capacity payments or transmission losses. The reality involves an intricate web of technical, financial, and governance challenges that cannot be addressed in isolation.
While this publication in its previous analyses have explored these challenges individually – focusing on specific aspects like circular debt, transmission infrastructure, or regulatory frameworks – this time we attempt to elaborate on how various risk factors in the energy sector interact, particularly their impact on the cost of capital and the viability of renewable energy projects. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
