Pakistan Institute of Development Economics



Restructuring of WAPDA: A Reality or a Myth

Serious financial crisis in Pakistan energy sector, mainly dueto poor governance, rising fuel prices and rampant corruption, led tothe decision of corporatisation of Water and Power Development Authority(WAPDA) in 1992. However, this decision has been highly debated in thecontext of its socio economic benefits as the energy crises continuesunabated. This study, by using semi-structured interview from energyexperts in the power sector, attempts to find the factors that withheldthe positive effects of this decision. The objective is to provideuseful input to frame future energy policy to overcome critical energycrises in Pakistan. The study concludes that the decision ofcorporatisation of WAPDA was a forced decision without proper homeworkrecommended by the International Monetary Fund (IMF) which worked as anobstacle to achieve required targets in context of energy crises.However, expert opinion shows that unbundling of WAPDA if managedadequately in line with the ground realities would help bring in thecompetition in market and support the neoliberal theory which calls forderegulation of businesses and privatisation of publicly owned assets,thus minimising the state intervention. Therefore, the only choice forthe government is to move forward with the reforms to frame efficientand effective power policy. Chile, with successful power reforms, is theexample quoted by the experts to be followed by Pakistan to overcomeload shedding and black outs. JEL Classification: H7 Keywords: Energy,Pakistan Energy Sector, WAPDA, Neoclassical Theory, Corporatisation,Privatisation, Restructuring, Governance

Zainab Khalid,

Muhammad Iftikhar-ul-husnain