Recently the energy sector and the Government energy policies have become one of the more controversial and hotly debated issue of Pakistan’s socio-economic scene. The paper presents a picture of the historical growth in power sector, of both demand and supply. The controversial 1994 power policy is then critically discussed. The related problems and policy options available to the government, under the current economic and political constraints, are also outlined. While the lack distribution capacity would suggest that Pakistan has long had a “hidden demand” (the bulk of the country’s geographic area is still not connected to the National power grid), power shortages only became a major issue of public debate during the early Eighties when the urban areas of the country first began suffering regularly from “load-shedding” by the public sector utilities. This not only affected the business and industrial sector but was also severely affected the daily routine of households (thus gathering the potential of becoming a major political issue). The controversy reached its height in 1995 when the then Pakistan People’s Party (PPP) government announced its private power policy, which envisaged not only the set up of new power units in private sector but also the privatization of state owned power generation units under private sector (mostly foreign) management. While all due credit must be given to the Government for attending to a potentially crippling shortcoming in the economic infrastructure, one must nonetheless also look at the political aspects of the power policy in order to appreciate its various elements. The paper docs this in the end.