The Competition Commission of Pakistan (CCP) has highlighted the need for competitive reforms in the power sector. In a recent report, the CCP detailed how the dominant role of state-owned enterprises (SOEs) in transmission and distribution is holding back progress. The CCP also detailed how SOEs’ extensive involvement stifles competition, impacting the sector’s overall development.
The report recommends opening the power sector to direct contracts between producers and buyers to foster a more competitive market, adopting the Competitive Trading Bilateral Contract Market (CTBCM) model, and removing the Central Power Purchasing Agency’s intermediary role. Notably, the National Electric Power Regulatory Authority (NEPRA) approved this CTBCM model in 2020, though it has yet to be fully implemented.
The CCP report also advocates separating power production, transmission, and distribution to enhance efficiency. It calls for urgent upgrades to the outdated power transmission infrastructure and suggests privatizing distribution companies (DISCOs) to curb line losses, which currently range between 9% and 35%. According to the report, well-performing entities bear the financial impact of underperforming SOEs, which could be alleviated through privatization.
In addition, the CCP recommends phasing out obsolete power plants to reduce capacity payments and implementing the Transmission Line Policy of 2015. The report also encourages private sector participation in expanding transmission infrastructure, which would support the growing power demand.
At the report’s launch, CCP Chairman Dr. Kabir Ahmed Sidhu stressed that a competitive power sector is essential for economic growth and affordable energy access, calling on the government to accelerate these reforms.
