Power policies of Pakistan and the required improvement.

Byline: Arooj Asghar

The concept of privatization is not new in Pakistan. It may be traced as back as in 1950s, when Pakistan Industrial Development Corporation (PIDC) was established in 1952 to boost up the industrial development in the country. From mid 50s, the military government headed by General Ayub Khan encouraged domestic production of manufactured goods, primarily textiles. Government provided extensive incentives such as lucrative tariffs, favorable tax regime, foreign exchange licenses, and quotas to local entrepreneurs. With all these benefits, wealth started accumulating in the hands of few families, which later known as the twenty-two families of Pakistan. Pakistan economy was taken as a model by the less-developed countries of the world at that time where they replicated Pakistan's economic measures in their country. In the sixties, the private sector had begun to come into its own.

The 'twenty-two families' in Pakistan was an informal combination of legally independent business entities run by respective families. After 1971 war, Government nationalized the industries, banks and factories.

Since the establishment of WAPDA in 1958, entire investment in generation, transmission and distribution of electricity was made by the public sector through WAPDA, which effectively created its monopoly in the country. The bulk of the country is served by former departments of WAPDA but now independent bodies (NTDC, CPPA, distribution companies etc), which extends from the north of the country down to Hyderabad and Balochistan are in south excluding Karachi and its environs, which were served by K-Electric. Because of financial mismanagement, public sector utilities were heavily leveraged and needed massive overhauling and restructuring. Government of Pakistan hired M/s Acres International of Canada to conduct the energy resources survey in 1977-78. Besides this, Pakistan also approached the World Bank, Asian Development Bank (ADB) and other donor agencies in late 70s' so as to revive these utilities.

The World Bank conducted a detailed evaluation of the sector, reviewed the performance of the utilities, and later suggested improvements measures in the operating efficiency of these public enterprises. The evaluation process, which started in late 70s' continued till early 80s'with the disbursement of first trench for financial and technical assistance to WAPDA. Initially the World Bank focused on financing the investments initialed by...