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Purpose

This study aims to examine the energy sector structural development and energy policies and their effects on Pakistan, including the structuring of energy sector, circular debt, international power producers and, time and again, energy policies and capacity charges, and, more interestingly, the increasing burden of tariffs on local masses.

Design/methodology/approach

The descriptive critical analysis method is used to assess the energy structure and policies, including energy policies since 1947–2021, the structuring of power sector, including the creation of electricity distributors and electricity generators and the role of independent power producers and their impact on energy.

Findings

The key findings showed that the restructuring can make the energy sector a more viable entity. After analyzing the energy structuring and energy policy problems, suggestions, including increasing the number of distribution networks, grid integration and prioritizing energy projects and net metering, were put forward for smooth, efficient and cost-effective functioning of the energy sector of Pakistan.

Originality/value

After analyzing the energy structuring and energy policy problems, suggestions and a way out are put forward for smooth, efficient and cost-effective functioning of the energy sector of Pakistan.

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