Pakistan’s energy infrastructure problem is no longer defined only by a shortage of power plants. The country has added coal, gas, hydropower, nuclear and renewable capacity, but the networks and institutions that move and sell energy have not improved at the same pace. The result is a system that can possess substantial installed capacity while still producing expensive electricity, limiting supply in high-loss areas and struggling to recover the full cost of service.
This gap between physical capacity and effective delivery shapes the sector. High-voltage transmission has expanded, yet bottlenecks remain between new generation centres and major demand areas. Distribution companies lose electricity through weak equipment, theft and poor collection. Gas pipelines reach millions of consumers, but declining domestic production has increased dependence on imported LNG. Households and businesses are also installing rooftop solar because grid electricity is costly or unreliable.
Pakistan therefore needs more than new generation. Its central infrastructure task is to make the existing system more flexible, financially stable and capable of moving lower-cost energy to consumers.
Generation Growth Has Outrun the Networks That Deliver It
Pakistan’s installed electricity capacity reached 46,605 MW by March 2025. Hydropower accounted for about one quarter of the total, nuclear power for nearly 8 percent, renewable energy for more than 12 percent when net-metered capacity was included, and thermal plants for the remainder. The generation base is now far more diverse than it was a decade earlier.
Installed capacity, however, does not measure how much electricity can be delivered economically at a particular time and place. Summer demand can exceed 30,000 MW, while winter demand may fall below 12,500 MW. This wide range leaves some plants underused for much of the year but still eligible for fixed capacity payments. Fuel prices, foreign-exchange pressures and transmission limits further affect which plants can operate economically.
The national transmission system has made important gains. By the end of the 2023–24 reporting period, the high-voltage network included about 31,769 kilometres of transmission lines and grid-station capacity of roughly 110,020 MVA across 500 kV, 220 kV and high-voltage direct-current assets. The 878-kilometre Matiari–Lahore HVDC line can transfer up to 4,000 MW from southern generation projects toward major demand centres in Punjab. It was a significant step because many large coal, nuclear and renewable assets are located far from the country’s main loads.
Further reinforcement is needed as major hydropower projects are developed in the north. New 765 kV infrastructure is planned to move electricity from the Dasu project toward the Islamabad region, while other 500 kV and 220 kV projects are intended to improve stability and reduce congestion. These investments are necessary, but transmission expansion cannot solve problems that occur after electricity reaches the distribution networks.
Distribution Companies Remain the Weakest Link
Pakistan’s distribution system is divided among regional public companies and K-Electric in Karachi. Their performance varies widely. Some service territories record relatively strong bill recovery and moderate technical losses, while others face overloaded feeders, damaged transformers, theft, poor metering and weak collection.
These problems directly increase the cost of power. Electricity purchased by a distribution company but lost or not paid for creates a revenue gap. When tariffs, subsidies and government payments do not cover the full cost of generation and network service, unpaid obligations accumulate across the system. This produces circular debt linking distribution companies, the central power purchaser, generators, fuel suppliers and public finances.
The government reported that power-sector circular debt had fallen to approximately PKR 1.614 trillion by June 2025 after settlements, efficiency improvements and negotiations with independent power producers. The reduction was substantial, but the remaining stock still limits maintenance and investment. A grid cannot become reliable if utilities lack the cash to replace transformers, upgrade conductors, install meters and maintain substations.
Modernization efforts include advanced metering, aerial bundled cables in theft-prone areas and digital monitoring of distribution transformers. These technologies can improve energy accounting and identify overloaded equipment or illegal connections. Their value depends on consistent implementation and stronger management.
Rooftop solar is adding another challenge. Net-metered capacity rose rapidly during 2024 and 2025 as consumers responded to high tariffs and falling equipment costs. Distributed generation can reduce daytime pressure on the grid, but it can also reduce utility sales while fixed network costs remain. Pakistan will need tariffs and technical standards that allow solar to expand without leaving the conventional grid with an unsustainable revenue structure.
Gas Pipelines and LNG Terminals Carry a Second Infrastructure Burden
Pakistan operates one of the region’s largest natural-gas distribution systems. The network includes more than 14,000 kilometres of transmission pipelines, over 160,000 kilometres of mains and tens of thousands of kilometres of service lines. It supplies more than 10.7 million consumers through systems operated mainly by Sui Northern Gas Pipelines and Sui Southern Gas Company.
This network once gave Pakistan a major domestic energy advantage. Local gas supported power generation, fertilizer production, industry, transport and household consumption. However, indigenous gas fields have declined without enough new discoveries to replace output. The pipeline system must now distribute a mix of domestic gas and imported regasified LNG.
Two floating storage and regasification units provide around 1,200 million cubic feet per day of LNG import capacity. They have helped reduce shortages for power plants and industry, but imported LNG is more expensive and exposes Pakistan to international prices, shipping availability and foreign-exchange constraints. Gas allocation becomes especially difficult in winter, when household demand rises while industry, fertilizer plants and power generators still require fuel.
The network also faces leakage, unaccounted-for gas and payment problems. As in the electricity sector, weak recovery and subsidized supply can limit funds for pipeline replacement and maintenance. The long-term value of Pakistan’s gas infrastructure depends on better pricing, loss reduction and a clear decision about which consumers should receive increasingly scarce pipeline gas.
Regional Trade and Market Reform Could Change How Power Moves
Pakistan’s location gives it the potential to join a wider regional electricity market. CASA-1000 is designed to deliver up to 1,000 MW of surplus summer hydropower from Kyrgyzstan and Tajikistan through Afghanistan to Pakistan. Most facilities outside Afghanistan have been completed or are close to completion, but the system cannot operate until the Afghan section is finished. The World Bank expects the full project to be implemented by the end of 2027.
Regional imports will not replace domestic investment, but they can improve seasonal flexibility and reduce the need to run more expensive fuel-based generation during certain periods. Future links with neighbouring systems could also support exports when Pakistan has surplus output.
Domestic market reform may be just as important. In 2026, the government formally launched competitive market operations and announced an initial 200 MW transaction. The aim is to allow eligible buyers and sellers to contract more directly instead of relying entirely on the traditional single-buyer structure. A competitive market could encourage more efficient use of generation and transmission, but it requires reliable metering, transparent network charges and clear open-access rules.
Pakistan has already built many of the physical assets required for a modern energy system: large power stations, HVDC transmission, LNG terminals, gas pipelines and a growing renewable base. The remaining weakness is integration. Generation planning, grid investment, distribution reform, fuel supply and pricing must operate as one system. The country’s next energy gains will come less from announcing additional megawatts and more from making existing infrastructure dependable, measurable and financially usable.
