Learning from Power Sector Reform : The Case of Pakistan
Pakistan's power sector underwent a substantial, if protracted, reform process. Beginning with an independent power producer program in 1994, the full unbundling of the national vertically integrated power and water utility, the Water and Powe...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/403611557151850485/Learning-from-Power-Sector-Reform-The-Case-of-Pakistan http://hdl.handle.net/10986/31667 |
| Summary: | Pakistan's power sector underwent a
substantial, if protracted, reform process. Beginning with
an independent power producer program in 1994, the full
unbundling of the national vertically integrated power and
water utility, the Water and Power Development Authority,
and the establishment of a regulatory entity, the National
Electric Power Regulatory Authority, followed in 1997,
paving the way for the eventual privatization of one major
distribution utility, Karachi Electric, in 2005. Plans to
privatize the remaining distribution utilities were shelved
following the controversy surrounding the Karachi Electric
transaction. A single buyer model has been in operation
since the sector restructuring, with the Central Power
Purchasing Agency fully separated from transmission and
dispatch (the National Transmission and Dispatch Company) in
June 2015. Despite these major steps, Pakistan has continued
to suffer from inadequate capacity and other constraints,
leading to large and frequent blackouts. At the heart of the
impasse is the so-called "circular debt" crisis,
whereby distribution utilities struggling to collect
revenues and meet regulatory targets for transmission and
distribution losses default on their payments to generators,
and the sector is periodically bailed out by the government
once losses accumulate to intolerable levels, at high cost
to the exchequer. This dynamic has undermined incentives for
utilities to improve their efficiency, while discouraging
generators from investing in new capacity to address supply
shortages. In the meantime, little has been done to
accelerate access to electricity to the significant share of
unserved population in rural areas. |
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