Boston, MA -- (SBWIRE) -- 10/11/2013 -- Since the Pakistani general election held on May 11 2013, the government has attempted to improve the country's power situation with a variety of measures, including a new five-year energy plan that was released on July 21. Despite political determination increasing, we believe the plans are too ambitious, given that hurdles to privatisation remain substantial as tariff hikes remain difficult to secure. With the unstable political environment and the country's fiscal balances unlikely to improve, the problem of circular debt is likely to persist and continue to cripple the sector.

The Pakistani general election held on May 11 2013 resulted in a coalition government, consisting of coalition leader, the Pakistan Muslim League (Nawaz) [PML(N)],and 19 other independent candidates. There now seems to be greater political will to improve the energy situation in the country, with the government releasing its latest energy plan (2013-2018). Under it, the power subsidy will be gradually phased out and load-shedding is projected to end in 2017. The plan hinges on agreements with the International Monetary Fund (IMF), World Bank and other private sector lenders, which are due to provide financing on the condition that generation, distribution companies and power plants are privatised. The water and power ministries would also be restructured, while outstanding dues owned by the government and the private sector will be adjusted.

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Even though the government has shown much determination in its latest plan, it still faces the same problems that plagued previous governments. Load-shedding across the country appears to be increasing across provinces, despite official statements that power shortage has fallen to its lowest in five years. The weak power sector continues to arrest the country's economic development, with the government announcing another power tariff increase for industrial and commercial user, slated to take effect on October 1 2013 of not less than 70% to PKR14 per unit from the current PKR5.79. Meanwhile, companies and authorities continue to struggle to arrest the growing number of domestic users stealing power.

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