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Benchmarking and Regulation for the Electricity Distribution Sector in Pakistan

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  • Muhammad Saleem

    (Muhammad Saleem is the Joint Director of the State Bank of Pakistan, and was till recently with the Crawford School of Economics and Government, The Australian National University, Canberra, Australia. Email: saleem.zia@sbp.org.pk.)

Abstract

Liberalization of public utilities, especially the electricity sector, in developing countries is a significant trend. In addition, some developing countries are in the process of developing a regulatory framework for the liberalized sector. These countries are facing the core issue of how to transform public utilities into market-oriented and regulated entities. Like other developing countries, Pakistan is no exception. This article measures the changes in and sources of efficiency between 1998 and 2003. We rely on DEA and Malmquist indices to calculate and decompose the changes in productivity of nine distribution companies in Pakistan between 1998 and 2003. The results suggest that on average there is 92 per cent efficiency in the sector and six firms are operating on the frontier. It also shows that total factor productivity in the distribution sector rose by an average 3 per cent a year in the 1998–2003 period. There is deterioration in efficiency change, pure efficiency change and scale efficiency change. All growth in total factor productivity is due to growth in technical change. The paper concludes by arguing that any electricity regulator could use these types of results to improve the efficiency and performance of the sector.

Suggested Citation

  • Muhammad Saleem, 2007. "Benchmarking and Regulation for the Electricity Distribution Sector in Pakistan," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 8(1), pages 117-138, January.
    • Handle: RePEc:sae:soueco:v:8:y:2007:i:1:p:117-138
    DOI: 10.1177/139156140600800107
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Jamasb, Tooraj & Thakur, Tripta & Bag, Baidyanath, 2018. "Smart electricity distribution networks, business models, and application for developing countries," Energy Policy, Elsevier, vol. 114(C), pages 22-29.
    2. Mirza, Faisal Mehmood & Mushtaq, Iqra & Ullah, Kafait, 2017. "Assessing the efficiency dynamics of post reforms electric distribution utilities in Pakistan," Utilities Policy, Elsevier, vol. 47(C), pages 18-28.
    3. Khan, Muhammad Arshad & Abbas, Faisal, 2016. "The dynamics of electricity demand in Pakistan: A panel cointegration analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 1159-1178.

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    More about this item

    Keywords

    JEL: E20; JEL: L50; JEL: O40; Electricity Distribution; Regulation; DEA; Productivity; Efficiency;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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