Distribution companies (DISCOs) are the face of the electric utility industry and its cash cows.  Any lapse in their performance has a ripple effect, not just within this industry but in the whole economy. A glaring example of this fact is the “circular debt” that has reached alarming levels already and is defying every effort to control it. 

The National Electric Power Authority (NEPRA) estimates that poor performance of the power sector is causing the nation's financial losses which exceeded Rs 690 billion last year. Roughly 60 percent of this came from DISCOs mostly due to energy losses and lack of full revenue recovery. No business or industry can survive with such colossal losses. 

This demanded that the government move swiftly to save the power sector from financial disaster. Instead, it seems content with rhetoric like shifting DISCOs to provinces or privatising them. Both seem non-starters. Moving their control to provinces will be merely shifting the monkey from federal shoulders to those of the provinces. Privatising them and hoping that it will rid DISCOs of their problems is also hoping against hope. 

The term “privatisation” generally means purposely shifting the ownership, operation, and control of a business or industry to private hands. In practice, it covers a broad set of options that fall on a broad spectrum between pure government control and minimal control by it.

As a business concept, “privatisation” has its roots in two schools of thought. One believes that public sector is inherently inefficient, lethargic, and wasteful therefore business and commercial activities should avoid any state role and allow markets to regulate them. The other school believes that private sector by its nature is greedy, rent-seeking, and exploitative and must not be given a freehand. 

Flight Delayed: The PIA Privatisation Fiasco

The first school received a major boost when the Berlin Wall fell and the Soviet Union collapsed. A change took place in the economic development philosophy that emphasised that trade, financing, and other prominent markets should be liberalised, deregulated, and privatised. International financing institutions (IFIs) and multilateral development banks (MDBs) championed the new cause and further promoted it by embedding it in their aid, financial support, and bailout packages.  

The power sector’s problems shouldn’t be attributed to the........

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