The federal government believes the privatization of power distribution companies (DISCOs) could improve efficiency, reduce electricity losses and eventually help lower power tariffs for consumers.
Privatisation Minister Mohammad Ali shared the details while discussing the government’s plans to attract private investment in the power distribution sector.
He said the government has considered lessons from previous experiences, including the renegotiation of Independent Power Producer (IPP) agreements, while designing the new privatization framework.
According to the minister, investors have faced challenges in Pakistan’s power sector in the past due to policy changes, regulatory uncertainty and political intervention. He said the new framework aims to provide a more predictable environment for investors.
Ali highlighted that Pakistan’s distribution companies serve around 38 million consumers, making the sector an attractive investment opportunity. He added that the existing infrastructure and consumer database offer significant commercial potential.
The minister said private investors could also explore new opportunities in solar energy and battery-storage projects using the current distribution network.
He further stated that privatization could support the development of a more competitive electricity market. Over time, private owners may be able to establish their own power generation facilities and sell electricity directly, increasing competition within the sector.
Ali emphasized that the purpose of privatization is not merely to transfer ownership. Instead, the main objective is to improve operational performance across the electricity supply chain.
He noted that electricity theft, unpaid bills and outdated infrastructure continue to increase costs for paying consumers. Improving bill recovery and reducing losses could benefit both investors and consumers.
The minister also stressed the importance of modernizing the distribution system through technologies such as smart meters to improve efficiency and transparency.
According to Ali, around 85 percent of electricity costs are linked to power generation, while distribution accounts for a relatively small portion of the total cost. This means that greater competition in power generation will also be necessary to achieve long-term reductions in electricity prices.
Pakistan currently operates under a single-buyer electricity model. The government is working on reforms aimed at encouraging competition and increasing investment in renewable energy projects.
However, Ali cautioned that consumers should not expect an immediate reduction in electricity bills after privatization. He said improvements in efficiency and market competition would take time before translating into lower tariffs.
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