Pakistan’s Power Sector Woes: A Beginning with no end

The woes of Pakistan’s power sector and associated negatives such as impact on GDP, high tariffs, long and frequent load shedding and poor governance are not unknown. To address these requires careful unfolding of the layers of mismanagement that continue to plague the sector’s supply chain. To begin with, it is important to enquire how it fares in terms of pricing, market development, generation and transmission compared to other economies. Electricity Market Development As is, electricity should be treated as a commodity where its production and trading are conceptually separated from the operation of the power system. On the other hand, Pakistan has a single buyer model that purchases electricity from GENCOs and supplies to DISCOs. This means that the monopoly status of electric utilities does not incentivize efficiency and instead encourages them to pass on the cost of their resultant inefficiencies to consumers in the form of heightened tariffs. If Pakistan’s supply of electricity becomes the object of market discipline rather than monopoly regulation of government policy, the economy and end consumer will have much to benefit from competitive markets. This, however, will not be a straightforward process requiring interplay of several factors.