Pakistan’s power sector has become a quagmire of inefficiencies, desperately in need of reform, which seems just around the corner but never truly arrives. An inability, or stubbornness, to improve, along with extenuating external circumstances, has already resulted in trillions of rupees of debt hanging over our heads. A financing deal—through restructuring, mind you—managed to bring some of the debt down, but a deeper analysis reveals that little has been done to address inefficiencies and under-recoveries. An astonishing Rs397 billion burden was added during FY25 due to losses, inefficiencies, and under-recoveries. It does not seem to be getting better. During the first quarter of FY26, Rs171 billion has already been added as well. Things are getting worse. The new year was heralded by media reports of an investigation into some prominent DISCOs—LESCO, GEPCO, MEPCO, and FESCO—for alleged corruption in the procurement of smart meters, following a recent Power Division directive undertaken without NEPRA’s approval. These inefficiencies—most of which are conveniently covered through higher tariffs for customers—impact us in more than one way. Paying consumers are moving towards rooftop solar solutions in record numbers, hurting recovery ratios as the worst-paying customers are left behind, while an increase in theft due to declining affordability further worsens distribution numbers. Looking at LESCO, the country’s second-largest DISCO, which serves over six million customers, we can see a trend. Despite numerous efforts, LESCO has shown a continuous decline over the last few years. It has struggled with increasing transmission and distribution (T&D) losses, poor recovery, regulatory fines, and overbilling scandals. These issues not only put a strain on consumers but also exacerbate national circular debt. Between FY23 and FY24, LESCO’s T&D losses worsened from 11.29 percent to 15.92 percent, which took the fiscal impact from Rs21.8 billion to Rs47.6 billion in one year. Mind you, the gap between NEPRA’s allowed T&D losses and those actually incurred by LESCO has continued to widen over the past five years. Data for FY25 has not yet been made public. Comparatively, other DISCOs, such as the Faisalabad Electric Supply Company (FESCO), have performed better. NEPRA’s Performance Evaluation Report (PER) for FY24 also highlighted LESCO’s failure to invest in much-needed network upgrades, which has allowed theft and technical faults to proliferate unchecked. Its under-recovery amount stands at nearly Rs40 billion, despite a recovery rate of 96.11 percent. This shows how even a minor deviation can cause a much larger fiscal impact than, for example, SEPCO, whose paltry 65 percent recovery causes a smaller financial loss to the national kitty of Rs38.2 billion. This illustrates how important LESCO’s recovery is. LESCO then fell under scrutiny again as NEPRA questioned its stock of meters, as defective ones surged—102,000 single-phase meters and 2,400 three-phase meters, as officially reported to NEPRA. In addition to operational failures, LESCO has also been embroiled in overbilling scandals. However, in a recent interview, LESCO Chief Executive Muhammad Ramzan Butt stated that the DISCO achieved 100 percent recovery in the first five months of FY26. He confidently said there was zero overbilling, which he cited as a primary reason for timely payments, while also casting questions on other DISCOs. He added that T&D losses fell by 2.2 percent over the same period. His interview suggested that a turnaround may be underway. Let’s see where things stand when the year ends. Regardless, persistent inefficiencies and reports of wrongdoing have undermined Pakistan’s energy sector. As demand for electricity continues to rise, especially in key industrial hubs like Lahore, LESCO’s failures are inflating costs. To avoid further exacerbating circular debt and jeopardising the country’s energy stability, a series of reforms is nonetheless required. A power sector plagued by rising T&D losses, ongoing recovery shortfalls, overbilling scandals, and regulatory fines is becoming increasingly unstable on the eve of the government’s privatisation agenda. The sector’s ability to meet growing electricity demand hinges on the efficiency and reliability of companies like LESCO. Until there are substantial improvements in governance, accountability, and efficiency, the power sector’s financial woes are likely to persist, further burdening consumers and undermining the country’s economic growth.