Boston, MA -- (SBWIRE) -- 06/28/2013 -- Problems that plague Pakistan's power sector are unlikely to diminish even as the caretaker government has agreed in principle to reform the sector as conditions under the IMF bailout dictates. The latest nationwide blackout on February 24 highlights the government's lack of operational expertise and coordination between the ministries, problems which will hamper any plans the next government attempts to implement. With the unstable political environment and the lack of improvement in its fiscal balances, we believe the country will face greater struggles in its fight against power shortage in the quarters ahead.

Since the arrest of Prime Minister Raja Pervez Ashraf for his alleged acceptance of bribes related to the building of private power plants, the country has been in chaos, with an ever-growing energy bills and no permanent solutions to the power shortage in sight for Pakistan. Load shedding across the country continues, and has crippled many industries, including textile and steel companies. The crisis peaked on February 24, when a fault at one power station led to multiple plant shutdowns and plunged the entire nation into darkness. As summer approaches, authorities are expecting the power crisis to worsen.

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The sector continues to battle with huge losses due to poor performance of assets and power theft, which is estimated by officials from the Water and Power Ministry to be close to 45%. Meanwhile, given that the total amount of bills defaulted by both private and public sectors is now at PKR426bn, the government is looking to install pre-paid metering systems to arrest the growth of these unpaid bills. Moreover, there have been efforts to prosecute those who have unpaid bills dating back more than a year. However, it remains to be seen if there is sufficient political will to support these efforts given the divide between provincial and central governments, and if a new government will continue to push through with this initiative. Despite the overall dim outlook, various foreign renewable energy firms continue to see opportunities to meet the energy gap left by conventional generators.

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