Pakistan Launches Power Reforms to Boost Efficiency and Economic Growth

ISLAMABAD: The Pakistan Power Reforms Initiative was launched at a gathering co-organized by the School of Business Studies at IBA and the Ministry of Energy (Power Division). The Federal Minister of Power, Sardar Awais Ahmed Khan Leghari, delivered a keynote speech, highlighting key issues and outlining a clear strategy for reforms aimed at enhancing the efficiency of the power sector, thereby fostering industrial and economic growth.

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The Minister emphasized that structural reforms are complex, with their impacts expected to become evident within a few months. The Power Division is proactively working to enhance governance standards for distribution companies while advocating for a significant overhaul of transmission infrastructure to boost efficiency and minimize losses. Regarding surplus generation capacity, it was noted that initiatives are being implemented to stimulate industrial demand through various measures, aiming to accelerate industrial and economic progress.

On the topic of tariffs, it was clarified that upfront debt repayments have greatly influenced capacity charges, and addressing this through different policy measures could lead to more rational pricing across the sector. Importantly, it is crucial to transition towards a competitive market environment where electricity can be traded between buyers and sellers, rewarding efficiency and moving away from a single-buyer cost-plus model.

The Minister also announced that a policy promoting the adoption of Electric Vehicles will be unveiled soon, aimed at increasing the uptake of Electric Vehicles in the country, particularly for two-wheelers and three-wheelers. This initiative is expected to boost electricity demand, reduce household transportation costs, and significantly cut down the import bill associated with fuel purchases. Furthermore, it was pointed out that Pakistan boasts one of the cleanest energy mixes globally, with over 55 percent of electricity generated from clean sources like hydropower, nuclear, and renewables. This figure is projected to exceed 70 percent in the coming years. Additionally, nearly 75 percent of the country’s electricity comes from domestic sources, a figure expected to rise to over 90 percent in the near future.

The event concluded on a positive note, focusing on a reform agenda that promises improved governance standards and greater efficiency in the generation, transmission, and distribution of electricity, ultimately leading to lower electricity prices that can stimulate industrial and economic growth.