Self-Inflicted: How Pakistan’s Energy Regula…
Pakistan does not need an external adversary to explain its economic decline. It has one at home, operating out of two regulatory buildings in Islamabad: the National Electric Power Regulatory Authority and the Oil and Gas Regulatory Authority, backstopped by a Ministry of Power and a Ministry of Petroleum that have spent two decades signing contracts, indexing tariffs, and deferring hard decisions in ways that now function less like national stewardship and more like a slow, self-administered dismantling of the country’s own industrial base. There is an old Urdu instinct for this kind of failure — “apne pairon par khud kulhari maarna,” to swing the axe onto your own foot — and it captures the pattern better than any conspiracy theory could. Nobody needs to have plotted Pakistan’s energy collapse. Two regulators simply kept striking the same foot, quarter after quarter, determination after determination, until there was nothing left to stand on.
Start with NEPRA, and start with the number that should embarrass every member of its board. On August 10, 2026, the Authority approved a 30-year, 9.4-US-cent tariff for the 102 MW Gulpur hydropower project — a project whose tariff history is itself a case study in regulatory drift, having been revised in 2015, modified again in 2021 for exchange-rate relief, and delayed by force majeure claims for the better part of a decade before finally being settled this month, over the recorded dissent of one of NEPRA’s own members. Three weeks earlier, the same regulator had approved a tariff of just 3.0899 US cents for a 269 MW hybrid wind-and-solar project at Dhabeji. A regulator capable of holding both of those numbers in its hands in the same month and treating them as equally acceptable outcomes is not pricing risk. It has simply stopped asking what things should cost.
Then, in February 2026, NEPRA turned the same instinct on ordinary citizens. Its Prosumer Regulations 2026 dismantled the one-to-one net metering framework that had made rooftop solar a rational household investment, replacing it with net billing: excess power sold back to the grid at the National Average Energy Purchase Price of roughly Rs 10–13 per unit, while the same household buys grid electricity back minutes later at full retail rates. A citizen who financed their own panels, took on their own installation risk, and asked nothing from the state now effectively subsidizes the grid every time the sun shines. Compare that to Gulpur’s sponsors, who face none of that asymmetry and are guaranteed indexed returns for three decades. The Ministry of Power approved this framework and let it stand, even after the Prime Minister was reported to have ordered a NEPRA appeal to protect existing solar users — an appeal that, months later, has changed remarkably little for new applicants.
OGRA, the sister regulator for oil and gas, has been just as busy inflicting damage of its own kind, and its failures deserve equal billing, because it is the gas sector, not electricity, that has produced Pakistan’s most persistent circular debt crisis. By July 2026, Pakistan’s gas circular debt had reached roughly Rs 3.44 trillion, and the country had missed an IMF deadline for a gas tariff notification that the Fund treats as a structural benchmark for the entire bailout program. OGRA’s own determinations tell the story: SNGPL and SSGC continue to report system losses well above the “unaccounted-for-gas” allowances built into their tariffs — 8.8 % actual against a roughly 7 % allowance for SNGPL, and a startling 13.6 % actual against an 8.2 % allowance for SSGC — with the gap simply passed through to consumers as cost rather than treated as the operational failure it is. In July 2026, when OGRA’s own recalculated prescribed prices should have lowered consumer gas bills, the federal government instead chose to keep tariffs unchanged and let SNGPL bank a projected Rs 44 billion surplus and SSGC a smaller one, rather than pass relief to the households and factories paying the bill. This is not regulation. It is bookkeeping in service of institutional convenience, dressed up as prudence.
The consequence of all this — NEPRA’s mispriced generation contracts, its punitive treatment of rooftop solar, OGRA’s tolerance of chronic system losses, and both ministries’ shared unwillingness to force a reckoning — is a business environment where foreign direct investors cannot model their own electricity or gas costs five years out, let alone thirty. Industrial production stalls not because Pakistani manufacturers lack skill or ambition, but because no factory can plan around a power bill and a gas bill set by regulators who reward legacy contracts over least-cost technology and who treat circular debt as something to defer rather than solve. Pakistan’s Interior Minister recently said publicly that “the system has collapsed” — a remark aimed at governance and security, but one that describes the energy sector with uncomfortable precision, and one the security establishment has been strangely slow to connect to its own economic consequences. A country cannot out-negotiate a debt crisis it keeps manufacturing at the regulator’s desk every single quarter.
None of this requires believing anyone set out to sabotage the country. It requires recognizing that an institution can do a slow version of the same damage through nothing more than inertia, misaligned incentives, and a persistent unwillingness to price energy the way the rest of the world now prices it — cheaply, competitively, and honestly. NEPRA and OGRA do not need another IMF-mandated hearing or another quarterly adjustment. They need leadership willing to admit that thirty years of axe-swings at the country’s own foot is enough, and that the next tariff determination should finally start asking what things should cost, not merely what precedent allows.
So who actually chooses the people who run NEPRA and OGRA? This is the part of the story that gets almost no scrutiny, and it should. Both chairmen are selected by the federal cabinet from shortlists assembled by selection committees chaired by a serving federal minister — for NEPRA, historically the Minister for Economic Affairs or the Minister for Power; for OGRA, the Ministry of Energy’s Petroleum Division. The candidates who rise to the top of those shortlists have, for two decades running, come almost exclusively from the Pakistan Administrative Service and the federal secretariat — career generalists rotated in from housing departments, communications ministries, or establishment divisions, rather than engineers or economists with a demonstrated record in utility regulation. There is no independent, technocratic vetting body standing between the cabinet and the appointment, no public disclosure of the full shortlist or the criteria used to rank it, and no post-tenure accountability mechanism that ties a chairman’s performance — the tariffs approved, the circular debt left behind, the net billing frameworks imposed — to any consequence at all once their term ends. The problem, in other words, is not a mystery. It is a selection process custom-built to reward proximity to the executive branch over technical competence, and it will keep producing the same outcomes for as long as it remains unreformed.
And even where scrutiny might otherwise reach a regulator’s decisions, Pakistan’s own accountability architecture has been quietly hollowed out from underneath it. The National Accountability Bureau’s 2022 amendments raised NAB’s jurisdictional threshold to corruption cases involving more than Rs 500 million and transferred all pending inquiries, investigations, and trials back to the relevant government departments — the same departments, in practice, that these cases concerned. By September 2023, records placed before the Supreme Court showed that 598 references had been returned out of the accountability courts under this framework, with 544 left sitting unresolved back at NAB itself. The Supreme Court struck most of those amendments down that same month — and then, in a further reversal a year later, restored them in September 2024. Whatever the merits of any individual case, the practical effect of two years of legislative back-and-forth was a system that spent more time relitigating its own jurisdiction than examining anyone’s conduct. A regulator operating inside that kind of accountability vacuum does not need to have done anything wrong to escape scrutiny; the vacuum does the work on its own. That, as much as any single tariff determination, is the structural failure worth naming.
That is also why waiting for a single saviour is the wrong instinct. No Messiah is coming to fix a regulatory architecture engineered, appointment after appointment, to avoid producing one. With roughly a quarter of the population below the national poverty line by the World Bank’s own 2025 assessment — and a far larger share exposed to multidimensional deprivation once health, education, and housing are counted — and a country of nearly 260 million people still negotiating its economic survival one IMF review at a time, the relief this country needs will not arrive as an individual. It will arrive, if it arrives at all, as a rewritten appointments law: an independent, technically qualified selection panel for NEPRA and OGRA chairmen and members, fixed and enforced performance benchmarks tied to circular debt reduction and least-cost tariff-setting, and a parliamentary oversight mechanism with actual teeth. Until that exists, the next chairman will look a great deal like the last one — and the axe will keep finding the same foot.
