KARACHI: Pakistan’s Federal Investigation Agency (FIA) is launching a “massive crackdown” against electricity and gas theft across the country starting today, Thursday, the minister for interior said, with the aim of fair distribution of utilities and access for all citizens.
The announcement comes a day after Pakistan and the International Monetary Fund (IMF) reached a staff level agreement (SLA) on the second and final review of Pakistan’s bailout program, which will release $1.1 billion for the debt-ridden South Asian economy.
Since the $3 billion bailout was approved last year, Pakistan has implemented several IMF-mandated reforms, such as budget adjustments, increasing interest rates, and higher energy prices. With the current program concluding on April 11, Pakistani officials are considering a new medium-term program with the IMF, which will come with its own set of reforms, including restoring the vitality of the energy sector.
Energy sector debt has already been a main issue that the IMF has highlighted in tackling Pakistan’s fiscal deficit, telling the South Asian nation to prevent further accumulation of circular debt in its power sector arising from subsidies and unpaid bills, and to implement reforms to reduce costs by improving electricity transmission and distribution, moving captive power into the grid, improving governance, and combating theft.
“Starting today, the Federal Investigation Agency (FIA) launches a massive crackdown against electricity and gas theft across the nation,” Interior Minister Mohsin Naqvi said on X.
“There will be no discrimination during the campaign. All responsible will be put behind the bars. This proactive initiative aims to curb the rampant theft of essential utilities, ensuring fair distribution and access for all citizens.”
Typically, people steal electricity by hooking up a wire to overhead electricity cables, siphoning off power without paying for it. Another way people steal power is to slow down their electricity meters.
Electricity theft cost the country Rs237 billion ($842 million) in 2022. In September 2023, the then caretaker government put power sector losses at Rs589 billion ($1.92 billion).
According to an industry report in 2023, the National Electric Power Regulatory Authority, which is responsible for regulating electricity supply in Pakistan, said circular debt had reached a staggering Rs2.3 trillion ($8.9 billion) as of June 30, 2023 due to low bill recovery and high losses due to theft.
In 2020, the Prime Minister’s Inspection Commission (PMIC) found almost $2 billion worth of losses annually in the natural gas supply chain due to mismanagement at all levels of policymaking, regulatory and operational functions.
The unaccounted-for gas (UFG) losses of the Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited were 15.85 and 8.83 percent respectively during FY 2020-21. The SNGPL lost 34,021 million cubic feet (mcf) of gas, while the SSGC lost 67,476 mcf of gas in FY 2020-21 due to measurement errors, leaks, and theft.
In a report released in January, the IMF noted Pakistan missed its target for power sector arrears, largely due to lower-than-expected recoveries and tariffs. The IMF says Pakistan should maintain power and gas tariffs at levels that ensure cost recovery, with adjustments made to safeguard the financially vulnerable through existing progressive tariff structures.
