Pakistan proposes abolishing uniform electricity tariffs — Dawn
In Pakistan, the Privatisation Commission has proposed abolishing the uniform electricity tariff regime for state-owned distribution companies as part of their sale to private investors. Licensed private suppliers will be able to set different prices and contract terms depending on electricity procurement costs, consumption profiles, payment discipline and service levels, Dawn reports.
The proposals are set out in a 25-page draft of a new operating regime for distribution companies after privatisation. The document has already been sent to relevant ministries, regulators and investors for feedback. This is not yet approved government policy, but the draft is planned to be presented to the prime minister this week.
Competition between suppliers
Under the proposed model, the state will gradually withdraw from direct electricity procurement and retail supply. The Central Power Purchasing Agency, CPPA-G, is to relinquish its role as the sole buyer for the retail market, while licensed suppliers will procure electricity, manage customer portfolios and compete for consumers.
Initially, suppliers will take over obligations under existing capacity contracts along with customer portfolios. As these contracts expire, they will gradually become responsible for demand forecasting and independent electricity procurement through bilateral agreements, auctions or organised energy exchanges.
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A supplier-of-last-resort mechanism is envisaged for consumers in regions where competition has not yet begun, as well as in the event that a supplier ceases operations. It will ensure uninterrupted electricity supply, billing, payment collection and the application of subsidised tariffs for protected consumer categories.
Subsidies and grid operations
The draft also provides for the phased reduction of subsidies arising from tariff differences and for bringing domestic electricity prices closer to the actual cost of supply. At the first stage, it is planned to identify households improperly receiving protected consumer status by distributing the load across several single-phase connections. Network operators and suppliers will use data analysis and physical inspections for this purpose.
Ownership of physical electricity grids is planned to be separated from retail electricity sales. Distribution network operators are to provide non-discriminatory access to all licensed suppliers, while their profitability is proposed to be linked to service quality, reduced grid losses and operational efficiency. The duration of the regulatory multi-year tariff period is intended to be extended from five to seven years.
