Pakistan PM orders accelerated privatization of power sector to tackle losses

A general view of the high voltage lines during a nationwide power outage in Rawalpindi on January 23, 2023. (AFP)
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Updated 15 December 2025
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Pakistan PM orders accelerated privatization of power sector to tackle losses

  • Tenders to be issued for privatization of three major electricity distribution firms, PMO says
  • Sharif says Pakistan to develop battery energy storage through public-private partnerships

ISLAMABAD: Pakistan’s prime minister on Monday directed the government to speed up privatization of state-owned power companies and improve electricity infrastructure nationwide, as authorities try to address deep-rooted losses and inefficiencies in the energy sector that have weighed on the economy and public finances.

Pakistan’s electricity system has long struggled with financial distress caused by a combination of factors including theft of power, inefficient collection of bills, high costs of generating electricity and a large burden of unpaid obligations known as “circular debt.” In the first quarter of the current financial year, government-owned distribution companies recorded losses of about Rs171 billion ($611 million) due to poor bill recovery and operational inefficiencies, official documents show. Circular debt in the broader power sector stood at around Rs1.66 trillion ($5.9 billion) in mid-2025, a sharp decline from past peaks but still a major fiscal drain. 

Efforts to contain these losses have been a focus of Pakistan’s economic reform program with the International Monetary Fund, which has urged structural changes in the energy sector as part of financing conditions. Previous government initiatives have included signing a $4.5 billion financing facility with local banks to ease power sector debt and reducing retail electricity tariffs to support economic recovery. 

“Electricity sector privatization and market-based competition is the sustainable solution to the country’s energy problems,” Prime Minister Shehbaz Sharif said at a meeting reviewing the roadmap for power sector reforms, according to a statement from the prime minister’s office.

The meeting reviewed progress on privatization and infrastructure projects. Officials said tenders for modernizing one of Pakistan’s oldest operational hubs, Rohri Railway Station, will be issued soon and that the Ghazi Barotha to Faisalabad transmission line, designed to improve long-distance transmission of electricity, is in the initial approval stages. While not all power-sector decisions were detailed publicly, the government emphasized expanding private sector participation and completing priority projects to strengthen the electricity grid.

In another key development, the prime minister endorsed plans to begin work on a battery energy storage system with participation from private investors to help manage fluctuations in supply and demand, particularly as renewable energy sources such as solar and wind take a growing role in generation. Officials said the concept clearance for the storage system has been approved and feasibility studies are underway.

Government briefing documents also outlined steps toward shifting some electricity plants from imported coal to locally mined Thar coal, where a railway line expansion is underway to support transport of fuel, potentially lowering costs and import dependence in the long term.

State authorities also pledged to address safety by converting unmanned railway crossings to staffed ones and to strengthen food safety inspections at stations, underscoring broader infrastructure and service improvements connected to energy and transport priorities.


Pakistan joins regional talks on Afghanistan in Iran as Kabul stays away

Updated 15 December 2025
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Pakistan joins regional talks on Afghanistan in Iran as Kabul stays away

  • China, Pakistan, Pakistan, Tajikistan, Uzbekistan, Turkmenistan all joined talks organized by Iran, as did Russia
  • Afghanistan was invited but decided not to attend, Taliban-led government was tight-lipped on the reasons

TEHRAN, Iran: Afghanistan’s neighbors met in Iran and agreed to deepen regional coordination to address political, economic and security challenges, as well as calling for sanctions on Afghanistan to be lifted. 

The only absent party? Afghanistan itself.

China, Pakistan, Pakistan, Tajikistan, Uzbekistan and Turkmenistan all joined the talks organized by Iran, as did Russia, according to a statement released after the meeting on Sunday.

Afghanistan was invited but decided not to attend. Its Taliban-led government was tight-lipped on the reasons, with the foreign ministry saying only that it would not participate because Afghanistan “currently maintains active engagement with regional countries through existing regional organizations and formats, and has made good progress in this regard.”

The statement from the talks in Iran stressed the importance of maintaining economic and trade ties with Afghanistan to improve living conditions and called for the country’s integration into regional political and economic processes.

The Taliban were isolated after they retook power in Afghanistan in August 2021, but in the past year, they have developed diplomatic ties. They now raise several billion dollars every year in tax revenues to keep the lights on.

However, Afghanistan is still struggling economically. Millions rely on aid for survival, and the struggling economy has been further impacted by the international community not recognizing the Taliban government’s seizure of power in the wake of the chaotic withdrawal of US-led troops in 2021. Natural disasters and the flow of Afghans fleeing Pakistan under pressure to return home have underlined Afghanistan’s reliance on foreign aid to meet essential needs.

The countries at the talks also voiced security concerns and pledged cooperation in combating terrorism, drug trafficking and human smuggling, while opposing any foreign military presence in Afghanistan. They underscored the responsibility of the international community to lift sanctions and release Afghanistan’s frozen assets, and urged international organizations to support the dignified return of Afghan refugees from neighboring countries.

The participants backed efforts to reduce tensions between Afghanistan and Pakistan, which have been particularly strained, with border clashes between the two sides killing dozens of civilians, soldiers and suspected militants and wounding hundreds more.

The violence followed explosions in Kabul on Oct. 9 that Afghan authorities blamed on Pakistan. A Qatar-mediated ceasefire has largely held since October, although there have been limited border clashes. The two sides failed to reach an overall agreement in November despite three rounds of peace talks.

Asif Durrani, Pakistan’s former special representative for Afghanistan, said the Taliban government’s decision to skip the meeting reflected a “lack of political maturity.” 

Writing on X, Durrani said the move reinforced concerns that the Taliban were unwilling to negotiate, instead adopting an “I don’t accept” stance that he said would do little to resolve serious regional problems.

Mohammad Sadiq, the current Pakistani special representative for Afghanistan who attended the talks, wrote on X that the Afghan people had already suffered enough and deserved better.

Only an Afghanistan that does not harbor militants would inspire confidence among neighboring and regional countries to engage meaningfully with Kabul and help unlock the country’s economic and connectivity potential, he wrote.

Participants agreed to hold the next meeting of foreign ministers of Afghanistan’s neighboring countries as soon as possible in Ashgabat, Turkmenistan, and welcomed Pakistan’s offer to host the next round of special envoys’ talks in Islamabad in March.

Iran’s foreign ministry spokesman, Esmail Baghaei, on Sunday said that the meeting had not been held for about two years and marked the first such gathering attended by special envoys on Afghanistan from neighboring countries as well as Russia. Russia and Uzbekistan sent the special envoys of their presidents, while Pakistan was represented by a delegate from the prime minister’s office.

Landlocked Afghanistan is sandwiched between the Middle East, Central Asia, and South Asia, making it strategically located for energy-rich and energy-hungry nations.