Privatisation of power utilities sought

Experts say regulator must facilitate private entities to enter market

ISLAMABAD:

Experts stress that the privatisation of power utilities is crucial for addressing the rising circular debt and driving innovation in Pakistan's power sector. They argue that the regulator's role must evolve into a facilitator, encouraging private entities to enter the market, which would enhance competition, support industrialisation, and implement effective wheeling reforms.

The success of K-Electric's privatisation serves as a strong example, showcasing improvements in operational efficiency, reductions in T&D losses, and significant infrastructure and technological upgrades. These points were emphasised at a report launch event by the Sustainable Development Policy Institute (SDPI) and the Network for Clean Energy Transition, which highlighted lessons from KE's privatisation.

KE CEO Syed Moonis Abdullah Alvi stated that privatisation is fundamental to sustainable development in Pakistan. He noted that prior to privatisation, KE relied on government subsidies, which ceased afterward, with the company investing approximately $4 billion across its value chain. Alvi also clarified that the Tariff Differential Subsidy benefits consumers rather than KE itself.

Alvi further highlighted the company's ability to attract competitive bids for renewable energy projects, demonstrating investor confidence in its privatised operations.

SDPI's Deputy Executive Director, Qasim Ali Shah, highlighted the government's ongoing efforts to privatise other power utilities, viewing it as a remedy for the sector's challenges, including tariff hikes, rising debt, and unreliable electricity.

Asad Mahmood, Principal Consultant at Arzachel, pointed out that the future of electricity distribution companies (DISCOs) depends on their ability to adapt and increase electricity sales. He stressed that embracing new operational strategies and offering value-added services, as seen with KE, is essential for growth and customer satisfaction in an increasingly competitive market.