Pakistan Institute of Development Economics

P & R Vol.2 Issue 5
Sustainability of the power sector
Publication Year : 2021

The Water and Power Development Authority (WAPDA) was created in 1958 as an autonomous statutory body to develop, operate and regulate electric power and water resources in the country. During the next fifty years the organization successfully developed the massive post-Indus Basin Treaty 1960 replacement works and with the private sector raised the power generating capacity from a hundred plus megawatts to 20,000 MWs. Today there are nearly twenty two million electric consumers and the generating capacity has soared to 35000 MWs. A couple of decades back the government and the international donors realised that structurally and operationally, WAPDA as a public sector entity, was no longer administratively or financially viable. The power sector was deemed unsustainable economically because of its inefficiencies and the corruption generated by the sheer size of WAPDA. There was widespread customer discontent, budgetary shortfalls and financiers/donors’ dissatisfaction. In November 2007, GOP finally notified the unbundling, separation and corporatization of the power wing of WAPDA into Pakistan Electric Power Company (PEPCO). Earlier it was established in 1998 but remained non-functional. The original plan and purpose of creating PEPCO was to create an entity for a period of three years responsible for managing and privatising the ten Distribution companies to reduce the financial burden of the state and to ensure greater efficiency in electricity distribution. For inexplicable reasons PEPCO not only inherited the ten Distribution companies but also assumed control of all public sector thermal power generation and the transmission and distribution companies as well. Additionally it assumed a dominant (and calamitous) role in determining future power sector development without regard to the massive costs by involving IPPs/RPPs from the private sector.