The electric power sector in Pakistan is growing faster (II
percent) than the average growth rate of other developing countries (10
percent). However, the demand in Pakistan is growing even faster than
the supply and therefore power shortage has become a serious problem.
The problem is compounded by inefficiency of electric power sector.
Moreover there is underpril:ing. subsidising, overstaffing and
inadequate maintenance. Like many other developing countries, Pakistan
has also opted for "privatisation" in the form of transfer of ownership
as the first best solution. However, a wide range of literature argues
that such type of privatisation in the case of electric power may not
lead to miracles. The present a11icle attempts to analyse the past
inefficiency of the electric power sector in Pakistan and performs a
diagnostic analysis to identify sources and causes of inefficiencies.
This analysis does not necessarily support a strict privatisation based
reform. The article further discusses the salient feature of
privatisation of electric power sector in Pakistan' and some important
issu,es related to its feasibility. It is noted that the privatisation
of electric power sector in Pakistan, as pursued now, may not resolve
the problems of this sector. It may ease short-run financial constraints
but it may also create a number of long-term problems such as
inappropriate planning, greater energy dependence and insecurity. It is
also noted that current problems stem primarily from institutional and
organisational constraints faced by public sector power enterprises. The
key issue may not be a choice between public or private ownership but to
determine an appropriate reform package based on either public/private
or a mixed ownership structure, that encourages greater private
involvement and functions well in the specific environment of
Pakistan.
Privatisation of Electric Power Sector in Pakistan: Some
Important Issues
