KARACHI: The Sustainable Development Policy Institute (SDPI) and the Network for Clean Energy Transition (NCET) jointly organized a consultative discussion on the “Privatization of Pakistan’s Power Utility Sector: Opportunities and Lessons Learned.” The event also featured the launch of a comprehensive report on the prospects of privatizing Pakistan’s power utility sector.
The report provided an in-depth analysis of global privatization reforms, highlighted potential challenges, and offered a critical review of K-Electric’s transformation journey. It underscored that privatization is a strategic pathway to improving efficiency, achieving operational turnaround, and enhancing consumer-centric initiatives within the power sector.
However, it strongly recommended that privatization should be executed with a well-regulated and strategic approach, aligning with broader economic and environmental goals, including compliance with the Carbon Border Adjustment Mechanism (CBAM) and support for green supply chains.
Qasim Shah, Deputy Executive Director of SDPI, welcomed the participants, stating that the session is aimed at drawing lessons from K-Electric's experience in the power sector.
He emphasized that the current crises in the sector — marked by increased tariffs, taxation issues, political instability, and public protests — highlight the urgent need for reform. Shah noted that the SDPI is mandated to advise the government on critical policy issues and social challenges through stakeholder dialogue. He attributed the ongoing power crisis to poor infrastructure, transmission bottlenecks, and outdated strategies.
Dr Khalid Walid, Research Fellow at SDPI, presented a summary of the report titled “Privatization of Pakistan's Power Utility Sector: Opportunities and Lessons Learned.” He pointed out that the country's power sector is plagued by inefficiencies in infrastructure, transmission, and generation, and argued that privatization could be a solution to these challenges.
Dr Walid cited successful global examples of the power sector privatization, such as in Chile and the UK, which have yielded positive outcomes.
Focusing on K-Electric, Dr Walid highlighted the considerable benefits of its privatization, including halving its Transmission & Distribution (T&D) losses and doubling its power consumption and consumer base.
K-Electric has revolutionized customer engagement through digital platforms that provide real-time updates on billing, power outages, and other services, he said, adding that the report indicated that K-Electric currently has over 1.88 million digitally connected consumers, a feat unmatched by any other Distribution Company (DISCO) in the country.
Additionally, K-Electric's privatization has been endorsed by the World Bank for saving PKR 900 billion for consumers and the government.
In his keynote address, Syed Moonis Abdullah Alvi, CEO of K-Electric, said that the power sector privatization is crucial for Pakistan's sustainable development and recalled that prior to privatization, K-Electric (formerly KESC) relied on government subsidies to operate, which ceased following privatization. Since then, the power utility has invested approximately USD 4 billion across its value chain.
Alvi clarified that the Tariff Differential Subsidy (TDS) benefits consumers in Karachi, not K-Electric. He also highlighted the company’s success in attracting 15 bids for renewable energy projects, including a recent bid at the lowest rate of 3.88 cents per unit.
Ameer Adil, Director General Private Power and Infrastructure Board (PPIB) said that power prices tend to become more affordable in competitive markets, adding that market liberalization is under discussion, with the possibility of allowing third-party involvement to enhance the purchasing power of consumers.
The seminar concluded with a strong endorsement of privatization as a vital strategy for the future of Pakistan’s power sector.
Copyright Business Recorder, 2024
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