Bloomberg and the mainstream financial press are obsessed with the optics of "darkness." They frame Pakistan’s plan for two-hour daily power outages as a desperate move by a failing state to manage energy costs. They see a crisis of scarcity. I see a long-overdue correction of a mathematical impossibility.
The lazy consensus suggests that "load shedding" is purely a failure of infrastructure. That is a surface-level take for people who don't understand the brutal reality of circular debt. The real story isn't that Pakistan can't produce enough power. It’s that the country is going broke paying for power it can’t afford to transport, sell, or collect revenue on.
Forcing two hours of darkness isn't a sign of regression. It is the only honest fiscal policy left on the table.
The Myth of the Capacity Crisis
Stop asking why the lights are going out. Start asking why the plants were built in the first place.
Pakistan suffers from a classic case of over-procurement driven by "Take-or-Pay" contracts. Years ago, the government signed deals with Independent Power Producers (IPPs) that guaranteed payment regardless of whether the electricity was actually used. We call these "capacity payments." Even if every factory in Punjab shuts down and every home in Karachi switches to candles, the Pakistani taxpayer still owes billions to these private entities.
By 2024, capacity payments accounted for roughly 70% of the total cost of electricity. We aren't paying for electrons; we are paying for the existence of steel and turbines. When Bloomberg reports on outages to "curb prices," they miss the point. You cannot curb a price that is locked into a 25-year legal contract. You can only mitigate the bleeding by reducing the variable costs—fuel and transmission losses—associated with actually running the grid.
I’ve seen dozens of emerging markets fall into this trap. They build for a "projected" 8% GDP growth that never manifests, leaving them with a Ferrari-sized electric bill and a bicycle-sized economy.
The Circular Debt Monster
The term "circular debt" is often used to sanitize what is essentially a massive, systemic theft. Here is how the engine of ruin actually works:
- Generation: IPPs produce power and bill the government.
- Transmission: The aging grid leaks energy like a sieve. In some regions, "Technical and Distribution" losses exceed 20%.
- Collection: People don't pay. Whether it's through outright theft (hooking lines directly to the grid) or systemic refusal in politically sensitive areas, the revenue never makes it back to the state.
- The Gap: The government can’t pay the IPPs. The IPPs can’t pay the fuel suppliers. The lights go out.
The "two-hour outage" is a crude but effective surgical strike on this cycle. By cutting the power, the state reduces the volume of energy that is inevitably stolen or lost in transit. You can't lose money on a commodity you refuse to deliver. It is the energy equivalent of a business closing its doors during slow hours because the cost of the staff exceeds the profit from the customers.
Why Solar is Actually Making Things Worse
Here is the counter-intuitive truth that the "Green Energy" lobby refuses to acknowledge: The rapid adoption of rooftop solar in Pakistan is cannibalizing the national grid and driving prices up for the poor.
Wealthy households and industrial units are fleeing the grid. They are installing Chinese-made PV panels at a record pace. Every time a rich factory owner goes off-grid, the "capacity payment" burden mentioned earlier doesn't disappear. It just gets redistributed among a smaller pool of remaining customers—mostly the middle class and the poor who can't afford the upfront cost of lithium batteries and solar arrays.
We are witnessing a "death spiral."
- Prices rise to cover fixed debts.
- More people leave the grid for solar.
- Prices rise again to cover the shortfall.
- Repeat until the grid is a ghost.
The government's plan to enforce outages is, ironically, an attempt to slow this migration. If you make the grid unpredictable, you force a conversation about who actually pays for the national infrastructure. The current path leads to a bifurcated society: a solar-powered elite and a state-dependent underclass living in permanent blackout.
The Efficiency Fallacy
People often ask: "Why not just fix the lines?"
This is the "People Also Ask" trap. Fixing the lines requires billions in CAPEX that the country doesn't have. You can't fix a leaky bucket if you can't afford the tape. International lenders like the IMF demand "cost-reflective tariffs," which is a fancy way of saying "make the poor pay for the leaks."
When the state implements a two-hour blackout, it is practicing a form of "demand-side management" that is far more honest than raising prices by another 30%. It acknowledges that the current consumption model is a fantasy.
Imagine a scenario where a family is $50,000 in credit card debt and their monthly interest exceeds their income. Would you tell them to buy a more efficient refrigerator to save $5 on their electric bill? No. You tell them to stop using the air conditioner entirely.
The High Cost of "Keeping the Lights On"
The global community looks at Pakistan and sees a humanitarian issue. I see a math problem that has been ignored for three decades. Every hour the lights stay on in a non-productive sector—like a poorly insulated government office or a residential block with 40% theft rates—the country moves one step closer to a sovereign default that would make the 2022 Sri Lankan crisis look like a minor market correction.
The cost of electricity in Pakistan is now higher than in many developed European nations. In a country where the per-capita income is a fraction of the West’s, this is unsustainable. The "lazy consensus" says the government is failing its people by cutting power. The reality? The government failed its people by promising them a lifestyle they hadn't earned through industrial productivity.
Stop Treating the Symptom
The outage is a symptom. The "Take-or-Pay" contracts are the cancer.
The only way out is a brutal, scorched-earth renegotiation of every single IPP contract signed in the last decade. The state needs to declare a "force majeure" on its own energy sector. It needs to tell the investors—many of whom are backed by foreign sovereign interests—that 15% guaranteed dollar-indexed returns are over.
Until that happens, two hours of darkness is actually the most "pro-business" policy available. It preserves the meager foreign exchange reserves for essential imports—like food and medicine—rather than burning them to keep the lights on for a grid that loses money every second it is energized.
The Bloomberg crowd wants a "stable" energy landscape. But stability is a lie when you're standing on a fault line of debt. You don't need "holistic solutions" or "synergistic reforms." You need to stop spending money you don't have.
If that means the fans stop spinning for two hours in Lahore, so be it. It’s better to have a scheduled blackout than a total systemic collapse that lasts for years.
Accept the darkness or go bankrupt in the light. There is no third option.
