In a sweeping overhaul of the power sector, Prime Minister Shehbaz Sharif has directed the Power Division to draft plans for a national electricity exchange modeled on India’s power market, alongside reforms to address ballooning Disco losses and stalled privatization efforts. The directives, issued during a high-level meeting, come as provinces resist federal pressure to provincialize loss-making power distributors.
Power Minister Sardar Awais Khan Leghari, chairing the Task Force on reforms, will spearhead the electricity exchange blueprint and net metering implementation strategy. Concurrently, the Power Division will present recovery plans for Disco losses, leveraging technology and tariff restructuring. A key focus is segregating tariff reduction measures into internally executable steps and those needing external consultation.
The push faces headwinds as provinces balk at absorbing debt-ridden Discos. Sindh rejected acquiring Hesco and Sepco, citing their Rs 130 billion annual losses, while Balochistan outright refused QESCO, calling its condition “deteriorated.” Punjab paused plans to hire transaction advisors after the federal government prioritized privatizing IESCO, FESCO, and GEPCO. Khyber Pakhtunkhwa (KP), however, signaled cautious interest, with SAPM Brig Tariq Saduzai (retd) stating, “We are seriously considering provincialization but require due diligence and federal-appointed advisors.”
The Power Division is also finalizing a wheeling regime and Competitive Trading Bilateral Contract Market (CTBCM) framework to liberalize power distribution. Meanwhile, TESCO’s off-grid solutions and domestic billing mechanisms are under review to curb losses in tribal areas.
With provinces divided and privatization complexities looming, the success of Sharif’s reforms hinges on balancing federal ambition with regional pragmatism. As one Punjab official noted, “Acquiring Discos demands rigorous financial analysis we cannot rush into this.”
The clock is ticking: Nepra’s upcoming Hesco/Sepco hearing on February 27, 2025, and QESCO’s unresolved fate underscore the urgency for consensus in a sector drowning in Rs 130 billion annual losses.
