Pakistan’s Privatisation Commission has proposed a sweeping overhaul of electricity distribution to accompany the sale of state-owned distribution companies, including an end to the uniform tariff that currently applies across those companies.
Under the proposal, licensed competitive suppliers would be able to charge different rates, while customers served under a Supplier of Last Resort arrangement would continue to pay regulated tariffs.
The plan is set out in a 25-page draft titled Power Distribution Companies’ Post-Privatisation Regime: Market Architecture, Business Models and Regulatory Oversight, circulated to ministries, regulators and investors for feedback. It is a proposal only, not an approved policy framework. Dawn reports that it is expected to be presented to the prime minister this week, but that step has not been confirmed as having taken place.
A central change would separate ownership of the physical distribution network from the business of selling electricity. The state-run Central Power Purchasing Agency would give up its single-buyer role for retail supply, with licensed suppliers buying power, managing customer portfolios and competing in the retail market, under the regulator’s oversight.
The network operator in each area would hold the Supplier of Last Resort licence, ensuring supply continues where competition has not yet developed or if a supplier fails. The draft also transfers legacy capacity-payment obligations to incoming suppliers along with customer portfolios.
Returns for investors would move away from an asset-based model to a performance-linked system, rewarding efficiency, loss reduction and service quality. The regulatory multi-year tariff period would be extended from five years to seven.
Subsidies would be reduced in stages, starting with households said to be claiming protected-consumer status improperly, with targeted relief redirected through the Benazir Income Support Programme and the National Socio-Economic Registry. Full implementation would be phased alongside the privatisations, subject to prior government approval.
Separately, Business Recorder reported on 1 November that three distributors, Faisalabad Electric Supply Company, Gujranwala Electric Power Company and Islamabad Electric Supply Company, are targeted for privatisation in the first quarter of 2027, with proposals to be made public by mid-November. The proposal, as drafted, does not change any consumer tariff immediately.
