Reforms in power sector

Published October 20, 2022

THE eyewash of ‘drastic’ measures approved by the federal cabinet in the name of power-sector ‘reforms’ underscores how deeply ad hocism is rooted in Pakistani officialdom. The decision to chuck out corrupt officials from key posts of state-owned power companies, roll out smart-metering infrastructure and set up low-cost solar energy projects in order to weed out corruption, revamp the distribution system and improve electricity generation amounts to treating an illness with aspirin when complicated surgery is required. The cabinet decision comes days after the World Bank president had impressed upon Finance Minister Ishaq Dar the dire need for critical power-sector reforms at their meeting in Washington. The issues bogging down the country’s electricity sector are too complex to tackle with the appointment of ‘honest’ officers or shifting to solar energy. Any serious effort to improve and restructure the collapsing power sector should simultaneously target the multiple problems pulling it down.

Broadly, the comprehensive reform strategy must aim to supply uninterrupted electricity at affordable prices to all types of consumers, privatise electricity generation, transmission and distribution to woo private investment in the power infrastructure, and develop a competitive market. No action whatsoever will work if implemented in isolation. The build-up of fiscally unsustainable power-sector debt to more than Rs2.5tr underlines the fallacy of bureaucratic thinking that piecemeal measures like the ones approved by the cabinet will help the government deal with the challenges present in the power sector. They will not. For example, when the previous PTI government strong-armed independent power producers to get them to revise their power purchase agreements, the people were told this would make electricity affordable for them. That has not happened as yet. This kind of thinking has only aggravated existing issues, burdening Pakistani consumers with inflated bills and regular blackouts at the cost of big losses to the economy and industrial competitiveness in the international markets. It is advisable for the government to make an all-encompassing and serious effort to fix the power sector rather than implement cosmetic measures.

Published in Dawn, October 20th, 2022

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