Editorial
The Privatisation Commission recently convened a meeting chaired by Federal Ministers for Privatisation and Energy, Aleem Khan and Sardar Awais Leghari. The meeting focused on expediting the privatisation process of distribution companies (Discos). Past administrations, including those of civilian and military dictator Musharraf, have emphasized the importance of privatisation in public statements and Letters of Intent submitted to the International Monetary Fund (IMF). However, this process has faced delays due to litigation and workers’ resistance.
The push for privatisation as the ultimate solution to sectoral inefficiencies continues to be supported by multilateral institutions such as the Asian Development Bank (ADB). However, there is a lack of clarity regarding the primary rationale behind this drive. It remains uncertain whether privatisation is seen as the only option to avert default as a perennial borrower of the IMF or if economic managers are genuinely convinced that privatisation is the way forward without empirical evidence from past sell-off deals in other countries.
The recent ADB report highlights the poor health of the country’s power companies, attributing circular debt and inadequate tariffs as key causes. While the privatised K-Electric is cited as a success story, there are critical factors that need to be considered. K-Electric continues to receive electricity from the national grid, generates expensive electricity mainly through thermal power, and benefits significantly from the tariff differential subsidy (TDS) compared to other Discos.
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Furthermore, addressing the existing flaws in policies and creating a competitive environment are crucial for the success of privatisation in the power sector. It is essential to consider the implications of privatisation without rectifying the current issues, especially with regards to the contracts signed with Independent Power Producers and the need to support an increase in renewable energy.
In conclusion, while privatisation has been proposed as a solution to the challenges faced by the power sector in Pakistan, it is crucial to critically evaluate the existing policies and address the potential implications of privatisation on the country’s economy, power sector, and household activities.
