The World Bank has called for a credible mechanism to determine marginal electricity prices in Pakistan, supported by transparent datasets, strong operational systems and independent review, as the country tackles deep structural challenges linked to growing solar adoption and mounting circular debt.

The position was conveyed during a meeting between World Bank Country Director Bolormaa Amgaabazar and Minister for Power Sardar Awais Leghari, where both sides reviewed reform initiatives and progress on World Bank–supported programmes in the energy sector.

Government officials acknowledged the Bank’s analytical and advisory role, including its engagement in reform discussions tied to the broader international financing framework.

Reiterating Pakistan’s commitment to sectoral reforms, the Power Minister outlined key priorities such as privatisation of DISCOs, competitive procurement frameworks, and initiatives aimed at improving investor sentiment.

He also highlighted an emerging challenge: the rapid expansion of on-grid and behind-the-meter solar capacity, estimated at nearly 25,000 MW, which has intensified fixed capacity cost pressures on the national grid. The growing use of solar and future acceleration of battery storage adoption, he warned, could increase the risk of grid defection if not appropriately managed.

“Policy continuity and tariff stabilisation are critical. Without them, well-intentioned measures may inadvertently discourage renewable energy uptake,” he noted.

Discussions also covered a proposed financing plan involving international financial institutions to retire the remaining Rs1.7 trillion circular debt, a longstanding burden that undermines the financial stability of the power supply chain.

The Minister underscored the World Bank’s potential role in stimulating domestic investment in battery storage, which he described as essential for improving efficiency and maintaining grid stability in a shifting consumption environment.

He added that Pakistan is advancing a pipeline of energy projects across hydropower, transmission and distribution, though several are experiencing delays. World Bank missions regularly visit to assess implementation progress.

The World Bank Country Director commended Pakistan’s reform agenda and reaffirmed the institution’s commitment to supporting efforts aimed at achieving a reliable, sustainable and financially viable power sector.

The meeting concluded with both sides expressing readiness to deepen cooperation, expand technical collaboration and explore new investment avenues within Pakistan’s evolving energy landscape.