Pakistan’s caretaker federal government has unveiled plans for a nationwide crackdown on electricity theft as part of efforts to reduce the growing circular debt in the power sector. This announcement was made during a press conference by caretaker Minister for Information and Broadcasting, Murtaza Solangi, and Power Minister Energy Muhammad Ali.
Power Minister Energy Muhammad Ali explained that Pakistan’s ten distribution companies collectively face an annual loss of Rs589 billion, with electricity theft and unpaid electricity bills being the primary contributors to this significant financial burden.
To tackle this issue, the caretaker government has devised a comprehensive three-pronged strategy:
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Technology Interventions: In areas where electricity theft rates range from 15% to 30%, technology-driven solutions will be implemented to curb theft.
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Private Sector Involvement: In areas where theft rates range from 30% to 60%, the private sector will be engaged in the management of distribution companies to improve efficiency and reduce theft.
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Enforcement: In areas where electricity theft exceeds 60%, strict enforcement measures will be implemented to deter theft and recover lost revenue.
The Power Minister emphasized the urgent need for reforms in the energy sector and stated that the government is evaluating the performance of the Board of Directors of power distribution companies, with changes in management being considered.
This announcement comes against the backdrop of widespread protests across Pakistan due to inflated power bills. Citizens have been demanding relief from high electricity costs, asserting that their bills exceed their incomes. The government has been under pressure to address this issue while simultaneously tackling the growing circular debt in the power sector.
Notably, Pakistan recently failed to secure IMF approval for relief on electricity bills, as it risked affecting recoveries by up to Rs6.5 billion. The IMF reportedly rejected the plan, highlighting concerns that it could impact recoveries by over Rs15 billion and requesting a plan from Pakistan to fill this financial gap.
