Structure and Regulation of the Electricity Networks in Pakistan

The main objective of this paper is to present an account of the network part of the electricity industry in Pakistan and analyse the transition of the network operators from part of a vertical-integrated state monopoly to unbundled regulated state monopolies. Empirical evidence documented here shows that dispersion in system losses and revenue losses is high across network operators, although it is not possible to disentangle managerial inefficiency from exogenous technical losses in the distribution systems. Asymmetric information on the part of the regulator and the state ownership of electricity networks is delaying any incentive base tariff regulation regime for the distribution firms. It is important that in the early stage of regulation, standards in cost-based reporting are set and benchmarks are established in order to perform cost-based regulation effectively. As only the availability of reliable information about current and potential future cost can help to rationalize tariffs and generate resources for the long run investment required for the stable electricity supply in the country.