Finance Minister Muhammad Aurangzeb reviews regulatory changes aimed at improving efficiency, investment, competition and private-sector participation in Pakistan’s power industry.
Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb chaired the second meeting of the Steering Committee on Power Sector Regulatory Regime on Wednesday, where officials reviewed progress on reforms designed to improve the efficiency and financial sustainability of Pakistan’s electricity sector.
The meeting examined the changing structure of the power industry, particularly the rapid expansion of solar energy and evolving electricity demand. The committee stressed that the regulatory system must keep pace with technological developments while balancing investment requirements, consumer interests and market competition.
Focus on Efficiency and Private Investment
Participants reviewed several structural challenges, including legacy capacity obligations, changing grid-demand patterns, service quality concerns and investment barriers. Discussions also covered ways to create stronger incentives for efficiency and establish a more predictable regulatory environment.
The committee considered reforms aimed at improving regulatory certainty, refining subsidy mechanisms and strengthening conditions for long-term private investment. Aurangzeb emphasized the importance of developing a market structure that encourages better service quality and efficiency while providing greater room for private-sector participation.
Network and Supply Functions Under Review
A key part of the discussion involved the possible separation of electricity network and supply functions. Under the proposed approach, distribution network operators could concentrate on operating and maintaining infrastructure, while competitive supply companies would function under an appropriate regulatory framework.
The committee also discussed clearer licensing arrangements, tariff methodologies and risk allocation mechanisms. These measures are intended to provide investors with greater certainty while ensuring that consumer interests remain protected.
Storage and Emerging Technologies
The meeting also examined opportunities created by battery energy storage systems and other emerging technologies. Officials discussed whether distribution companies could undertake selected infrastructure and ancillary commercial activities through separate entities or special-purpose vehicles.
Aurangzeb stressed that such activities should operate under transparent rules and safeguards so that any benefits generated through public infrastructure are appropriately shared with consumers.
Technical Working Group to Advance Reforms
The committee was briefed on the proposed programme of the Technical Working Group, including its terms of reference and work on tariff methodology. The finance minister directed the group to follow a structured and consultative approach and incorporate feedback from relevant stakeholders.
Aurangzeb called for an evidence-based and time-bound reform process focused on financial sustainability, improved service quality, affordability and a competitive power market.
The meeting was attended by Federal Minister for Power Sardar Awais Ahmad Khan Leghari, Minister of State for Finance, Adviser to the Prime Minister on Privatisation Muhammad Ali, senior government officials and representatives of relevant institutions and stakeholders.