Pakistan’s leadership touted the China-Pakistan Economic Corridor (CPEC) as the answer to the nation’s crippling energy crisis. But as we now see, it’s turning into a debt trap that is suffocating the economy. The country’s capacity payments to independent power producers have skyrocketed, ranking as the third-largest debt obligation, largely due to rushed deals with Chinese state-owned companies.
While billions were pumped into building state-of-the-art power plants, the vital backbone of the energy infrastructure – the distribution system – was left neglected. Pakistan’s Distribution Companies (DISCOs), responsible for transmitting energy, remain outdated and inefficient. Without any significant reforms or budget focus on upgrading these companies, the energy produced by new plants is often wasted or stuck in the grid.
The government’s failure to address the root cause of the power crisis before signing these costly deals has turned CPEC from a savior into a financial burden. Now, Pakistan is forced to pay for unused power that it can’t even deliver to the public. With no reforms to the DISCOs in sight, new power plants will only add to the growing crisis, further straining the nation’s finances.
