THIS is with reference to the editorial ‘Handing over Discos’ (March 10), which sparked a crucial debate concerning the fate of Pakistan’s ailing power distribution companies (Discos). While the proposed transfer of these companies to provincial control might seem like a quick-fix, it presents a multitude of problems.
As such, burdening already financially challenged provinces, like Balochistan and Khyber Pakhtunkhwa (KP), with Discos’ massive losses would cripple their budgets and offer no real solution. Additionally, maintaining a uniform national tariff structure and applying subsidies across fragmented provincial management would be incredibly complex.
The real answer does not lie in provin- cialisation, but in a well-structured privatisation plan. The proposed transfer of Discos to provinces merely aims at redistributing the financial burden, not eliminating it. This approach fails to address the core issue, which is inefficiency. Privatisation, on the other hand, injects fresh capital and expertise. Numerous countries worldwide have successfully revitalised their power sectors through privatisation.
The proposed transfer of Discos to the provinces ignores the wealth of experience and success stories available on the global stage. Privatisation, when implemented thoughtfully, can be a powerful tool for revitalising a struggling power sector.
In the 1990s, Brazil embarked on a comprehensive privatisation programme for its power distribution companies. This move attracted significant foreign investment, which was then channelled into upgrading as well as expanding the country’s distribution infrastructure. The results were rather impressive — a drastic reduction in losses, a more efficient grid, and, ultimately, a more reliable power supply for the people.
Liekwise, Chile provides a compelling example of its own. Following privatisa-tion, competition emerged within the power sector, leading to a dynamic market environment. This not only drove down electricity tariffs for Chilean consumers, but also incentivised improved service quality. The success of Chile demonstrates that privatisation can be a catalyst for positive change, benefiting both businesses and individual consumers.
Besides these countries, even developed nations, like the United Kingdom, have witnessed the transformative power of privatisation. Following the privatisation of its electricity sector in the 1980s,
the UK, as a result, saw a significant improvement in efficiency, reliability and customer service. Today, the UK has a robust and competitive power market, a testament to the long-term benefits of well-executed privatisation.
These are just a few examples. Countries like Argentina, Peru, and the Philippines have also undertaken similar successful privatisation initiatives in their power sectors. By learning from these models and adapting them to Pakistan’s specific context, we can unlock a brighter energy future for the nation.
Besides, private firms bring a wealth of specialised expertise in distribution network management, billing and collection systems. This expertise often translates to reduced theft and improved revenue collection, directly impacting the financial health of the Discos.
However, it is important to acknow-ledge the existence of ‘vested interests’ that may resist privatisation. These entities, including certain labour unions, might exert political pressure to maintain the status quo. Here is where a transparent and well-structured privatisation process becomes crucial. By ensuring fair labour practices and robust regulations, the government can mitigate the influence of vested interests and pave the way for a successful transition.
Let us not forget the true cost of one’s inaction. The status quo, where Discos haemorrhage money, serves only those who benefit from the inefficiencies. These inefficiencies translate to higher electricity bills and unreliable power supply. The vast majority of Pakistanis are already struggling to make ends meet, and the exorbitant cost of electricity only worsens their plight. We simply cannot afford to maintain the current system.
Majid Burfat
Karachi
Published in Dawn, April 1st, 2024
