Brace for impact: The grid is in a nose dive

Pakistan’s power sector is a stark example of the consequences of decades of mismanagement and flawed planning. What began as policy missteps has evolved into a crisis so intricate that even the country’s leading experts struggle to untangle the web of interconnected problems.

Like a patient surviving only on life support, the sector relies almost entirely on massive government subsidies and temporary fixes to function. Economist Dr. Atif Mian aptly describes it as a “zombie sector” — draining national resources while showing little sign of genuine recovery.

Systematic Failures and Supply-Demand Mismatch

The crisis is the culmination of systematic failures spanning decades. At its core lies a fundamental mismatch between supply and demand, compounded by shortsighted policies that favored quick remedies over sustainable solutions. Today, Pakistan’s installed power generation capacity stands at approximately 46,000 megawatts, far exceeding the peak national demand of around 30,000 MW. This stark disparity highlights the sector’s inefficiency and the disconnect between planning and actual needs. For deeper analysis, see Renewables First publications.

The Capacity Trap

This imbalance has created what experts call a “capacity trap”, where fixed costs for underutilized power plants — many with payments denominated in US dollars — continue to accumulate regardless of electricity production. Policies aimed at attracting private investment through risk transfer mechanisms have resulted in generation costs 87–140% higher than neighboring countries, making electricity in Pakistan among the most expensive in the region.

Transmission Challenges

The sector’s challenges extend beyond generation to the transmission network. Pakistan’s aging grid faces what experts term the “south-north barrier”, where geographical constraints prevent efficient power distribution. These bottlenecks force the system to curtail cheaper renewable energy while maintaining expensive thermal plants to meet demand. The paradox is clear: some regions suffer shortages while others hold surplus capacity that cannot be effectively delivered.

Article / Report originally published at: Pakistan Today