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ISLAMABAD: Pakistan’s power distribution companies lost over Rs1 trillion in FY25 due to high transmission losses and weak bill recovery, deepening circular debt and undermining service quality.
Pakistan’s power distribution system bled more than Rs1 trillion in 2024-25 as high transmission and distribution losses and unpaid bills eroded revenues, according to the latest report by National Electric Power Regulatory Authority.
In its Performance Evaluation Report for FY25, the regulator said structural inefficiencies, weak governance and operational gaps continued to plague the sector. The findings highlight persistent transmission and distribution, or T&D, losses, poor recovery ratios and unreliable system operations across distribution companies.
Ex-Wapda distribution companies reported combined T&D losses of 17.55% during FY25. Unrecovered billing stood at around 3.5%. Nepra estimated that roughly Rs910 billion worth of electricity was lost within the distribution network alone. When losses attributed to K-Electric are included, the cumulative financial impact exceeds Rs1 trillion.
NEPRA said no distribution company met its technical loss reduction targets for the year. As a result, the sector suffered an additional estimated financial loss of Rs265 billion. The largest contributors were Peshawar Electric Supply Company, Quetta Electric Supply Company, Sukkur Electric Power Company and Lahore Electric Supply Company, with losses of Rs87.48 billion, Rs52.41 billion, Rs36.04 billion and Rs35.17 billion, respectively.
Nepra linked the mounting losses to elevated T&D leakages, weak revenue recovery and operational bottlenecks. It said these inefficiencies were feeding Pakistan’s chronic circular debt crisis, which has strained public finances and increased reliance on government subsidies.
According to the regulator, the government’s policy of revenue-based load shedding failed to deliver meaningful improvements in recoveries. Instead, it exacerbated public dissatisfaction and contributed to further accumulation of arrears. Distribution companies continued to impose power cuts in high-loss areas, yet recovery performance remained below expectations.
Safety standards also deteriorated during the fiscal year. A total of 118 fatalities were reported across distribution companies, including 38 employees and 80 members of the public. Islamabad Electric Supply Company recorded the highest number of incidents, followed by Pesco, K-Electric and Hyderabad Electric Supply Company. Companies attributed many accidents to consumer negligence or incidents occurring on private premises, but the regulator said systemic safety gaps persisted.
Pakistan’s power sector has long struggled with structural inefficiencies. Official data shows distribution losses have remained in the high teens for several years, well above global benchmarks of 8% to 10% for comparable systems. The gap reflects outdated infrastructure, electricity theft and weak enforcement mechanisms.
The circular debt stock has surged over the past decade, driven by under-recoveries, delayed tariff adjustments and capacity payments to power producers. The government has periodically revised tariffs under guidance from international lenders and domestic regulators to contain the buildup. However, weak recoveries at the distribution level continue to undermine these efforts.
Nepra noted some incremental improvements in governance and monitoring but said operational efficiency remains fragile. Frequent load shedding and delays in new connections have also hurt industrial and commercial consumers. Businesses have repeatedly flagged unreliable electricity supply as a key constraint on competitiveness and export growth.
The regulator urged distribution companies to strengthen enforcement against theft, modernise metering systems and improve billing transparency. It also stressed the need for investment in grid upgrades and safety protocols to reduce both financial and human losses.
With electricity demand expected to rise alongside population growth and industrial activity, structural reform in the distribution segment remains critical. Without sustained improvements in loss reduction and recovery performance, the burden on consumers and the national exchequer will likely intensify, leaving the National Electric Power Regulatory Authority under pressure to tighten oversight further.
