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Privatisation of Electric Power Sector in Pakistan: Some Important Issues

Author

Listed:
  • Abdul Ghafoor

    (Department of Economics, Faculty of Business and Economics, Eastern Mediterranean University, Turkish Republic of Northern Cyprus)

  • Rizwana John Weiss

    (Development and Project Planning Centre, University of Bradford, Bradford, UK.)

Abstract

The electric power sector in Pakistan is growing faster (11 percent) than the average growth rate of other developing countries (10 percent). However, the demand in Pakistan is growing even faster than the supply and therefore power shortage has become a serious problem. The problem is compounded by inefficiency of electric power sector. Moreover there is underpricing, subsidising, overstaffing and inadequate maintenance. Like many other developing countries, Pakistan has also opted for "privatisation" in the form of transfer of ownership as the first best solution. However, a wide range of literature argues that such type of privatisation in the case of electric power may not lead to miracles. The present article attempts to analyse the past inefficiency of the electric power sector in Pakistan and performs a diagnostic analysis to identify sources and causes of inefficiencies. This analysis does not necessarily support a strict privatisation based reform. The article further discusses the salient feature of privatisation of electric power sector in Pakistan and some important issues related to its feasibility. It is noted that the privatisation of electric power sector in Pakistan, as pursued now, may not resolve the problems of this sector. It may ease short-run financial constraints but it may also create a number of long-term problems such as inappropriate planning, greater energy dependence and insecurity. It is also noted that current problems stem primarily from institutional and organisational constraints faced by public sector power enterprises. The key issue may not be a choice between public or private ownership but to determine an appropriate reform package based on either public/private or a mixed ownership structure, that encourages greater private involvement and functions well in the specific environment of Pakistan.

Suggested Citation

  • Abdul Ghafoor & Rizwana John Weiss, 1999. "Privatisation of Electric Power Sector in Pakistan: Some Important Issues," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 38(1), pages 69-84.
    • Handle: RePEc:pid:journl:v:38:y:1999:i:1:p:69-84
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    File URL: http://www.pide.org.pk/pdf/PDR/1999/Volume1/69-84.pdf
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    References listed on IDEAS

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    1. Barnett, Andrew, 1992. "The financing of electric power projects in developing countries," Energy Policy, Elsevier, vol. 20(4), pages 326-334, April.
    2. Bagdadioglu, Necmiddin & Waddams Price, Catherine M. & Weyman-Jones, Thomas G., 1996. "Efficiency and ownership in electricity distribution: A non-parametric model of the Turkish experience," Energy Economics, Elsevier, vol. 18(1-2), pages 1-23, April.
    3. David Boles De Boer & Lewis Evans, 1996. "The Economic Efficiency of Telecommunications in a Deregulated Market: The case of New Zealand," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 24-35, March.
    4. Fare, R. & Grosskopf, S. & Logan, J., 1985. "The relative performance of publicly-owned and privately-owned electric utilities," Journal of Public Economics, Elsevier, vol. 26(1), pages 89-106, February.
    5. David M. Newbery & Michael G. Pollitt, 1997. "The Restructuring and Privatisation of Britain's CEGB—Was It Worth It?," Journal of Industrial Economics, Wiley Blackwell, vol. 45(3), pages 269-303, September.
    6. Dong-Soo Koh & Sanford V. Berg & Lawrence W. Kenny, 1996. "A Comparison of Costs in Privately Owned and Publicly Owned Electric Utilities: The Role of Scale," Land Economics, University of Wisconsin Press, vol. 72(1), pages 56-65.
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    Cited by:

    1. repec:pid:wpaper:2012:4 is not listed on IDEAS
    2. Afia Malik, 2012. "Power Crisis in Pakistan: A Crisis in Governance?," PIDE Monograph Series 2012:1, Pakistan Institute of Development Economics.
    3. Rashid Amjad & Musleh Ud Din & Idrees Khawaja & Nasir Iqbal & Ahmad Waqar Qasim, 2012. "Fiscal Federalism In Pakistan," PIDE Monograph Series 2012:4, Pakistan Institute of Development Economics.

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