CCP pushes for reforms in power sector to end state monopoly

Pakistan’s power sector struggles due to government monopoly, says Competition Commission.

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Pakistan’s Competition Commission has called for the dismantling of the state monopoly in the electricity sector, citing it as a significant obstacle to sectoral growth, Express News reported.

In a report released on November 9, 2024, the commission urged the government to open the electricity market to competition.

The report recommended the immediate implementation of a two-way market model (CTBCM), where power generation and distribution companies could enter direct contracts for electricity sales.

Under this model, consumers, including buyers of one or more megawatts, would be able to make direct agreements with power producers.

The Commission also proposed phasing out the role of the Central Power Purchasing Company, stating that the regulatory authority, NEPRA, approved the CTBCM model in 2020, but its implementation has been delayed.

One of the key recommendations included separating the production, transmission, and distribution functions within the power sector. The Commission further highlighted the urgent need to upgrade the dilapidated transmission infrastructure.

The report pointed out that state-owned distribution companies are facing line losses ranging from 9% to 35%, with privatisation being the only viable solution to reduce these losses.

It suggested that efficient distributors are currently subsidising the poor performance of less efficient companies, thus exacerbating the problem. Privatising distribution companies (DISCOs) is proposed as a way to cut line losses and improve operational efficiency.

Additionally, CCP recommended the immediate closure of outdated power plants to ease the burden of capacity payments and called for the inclusion of the private sector in transmission infrastructure development, in line with the Transmission Line Policy of 2015.