🔲 Public Inquiry Series | Episode 14
Topic: How Can Pakistan’s Power System Be Fixed [How Expensive Electricity Bills Can Be Understood and Reduced]
🔺 When institutions refrain from providing facts, the responsibility to uncover the truth falls upon the public. Research and Writing: Syed Shayan
🔳 Revival of WAPDA: The Only Way Out of the IPP Trap??
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When WAPDA was subjected to restructuring in 1992 and the model of private power plants, known as IPPs, was introduced in 1994, the question arises: what crime had WAPDA committed that it was given such a punishment? At that time, there was no circular debt, no overwhelming financial pressure, and no public resentment of the kind we see today associated with the IPP system. There was a relative balance between supply and demand, installed capacity was aligned with requirements, and large scale load shedding was not a widespread issue.
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The process of dividing WAPDA and initiating power sector reforms began during the government of Nawaz Sharif, when privatization and power sector reform policies were introduced. This process was further advanced by the government of Benazir Bhutto through the 1994 Power Policy, which placed private power producers at the center of the system.
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Can you believe that Pakistan’s system of electricity generation, transmission, and distribution has been operating for the past 30 years without a single central command?
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Just as the military, police, or judiciary cannot be handed over to private companies because their purpose is not profit but public protection, in the same way, providing affordable electricity is the responsibility of the state. For this, the state must immediately bring all private power plants in Pakistan under its command so that the economy continues to function and electricity is made available to the public across the country at a reasonable cost and without interruption.
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Over the past 20 years, more than 800 cities worldwide have taken back essential services such as water, electricity, and transport from private companies and returned them to state or municipal control.
We request you to kindly share your opinion after reading this article.
🔳 Before the current IPP system, Pakistan’s entire electricity system was largely operated under a single institution, WAPDA, which was responsible for power supply across the country. This institution handled generation, transmission, and distribution itself, meaning the system functioned under a unified command, led by the Chairman of WAPDA.
At that time, WAPDA consisted of one Chairman and at most three members, namely Member Electricity, Member Water, and Member Finance. Day to day operations and decision making were entirely managed within this single institution.
During that era, a significant portion of electricity was generated through hydel sources, although not all electricity came from water. A portion was also produced through thermal sources.
WAPDA was established in 1958, at a time when the concept of state owned enterprises was very strong worldwide. This approach was influenced to some extent by socialist economic models. It was widely accepted that essential services such as electricity, water, and roads were the responsibility of the state and should not be treated purely as profit driven activities.
After the collapse of the Soviet Union in 1991, global financial institutions, particularly the International Monetary Fund and the World Bank, promoted a capitalist mindset among bureaucrats and policymakers in countries like Pakistan, emphasizing that the state should not engage in business activities.
In this context, developing countries including Pakistan were encouraged to believe that state owned enterprises were a burden, that the private sector could operate more efficiently, and that electricity generation should be treated as a commercial activity rather than a basic public service.
As a result, under the power sector reforms of 1992, WAPDA was gradually unbundled into separate entities for generation, transmission, and distribution. These institutions were later placed under the Ministry of Water and Power, which today operates as the Power Division under the Ministry of Energy.
When WAPDA was restructured in 1992, there was no concept of circular debt, and there was no major financial burden. Consumers only paid for the electricity they used, with no additional complex charges or hidden financial burdens included in their bills.
(Today, Pakistan’s power sector debt, known as circular debt, has reached approximately 2.5 to 2.7 trillion rupees, and if the liabilities of the Power Holding Company are included, this figure exceeds 3 trillion rupees.)
At that time, Pakistan’s total installed capacity was approximately 7000 to 8000 megawatts, while demand generally remained close to or below that level. Therefore, prolonged and widespread load shedding was not a common issue, and only occasional localized shortages were observed.
The surprising question is: if everything was functioning so effectively, why was such a well organized institution dismantled?
The simple answer is that a new global economic model was being introduced at the time under the banner of “reforms,” commonly referred to as neoliberalism. This model emphasized reducing the role of the state and increasing private sector participation and competition.
This decision was made in collaboration with international financial institutions such as the World Bank and IMF, under which WAPDA was divided into multiple companies.
The process of restructuring began under Nawaz Sharif’s government and was further institutionalized through Benazir Bhutto’s 1994 Power Policy, which gave a central role to IPPs.
As a result, today Pakistan’s power sector is no longer under a single central authority like WAPDA but is divided into approximately 150 administrative and commercial entities.
On one side, there are around 10 distribution companies (DISCOs), 4 generation companies (GENCOs), the National Transmission and Dispatch Company (NTDC), the Central Power Purchasing Agency (CPPA G), the National Electric Power Regulatory Authority (NEPRA), the Ministry of Energy Power Division, WAPDA itself, and separate electricity systems for Azad Jammu and Kashmir and Gilgit Baltistan, totaling around 21 public sector institutions.
On the other side, approximately 100 private power producers (IPPs) operate with their own companies, boards, and long term contracts. In addition, institutions such as the Private Power and Infrastructure Board (PPIB), Alternative Energy Development Board (AEDB), Karachi Electric, and provincial energy departments are also part of the system.
In other words, a power sector that was once managed efficiently under a single strong institution has now become a fragmented, complex, and highly disjointed structure consisting of nearly 140 to 150 entities.
Ironically, the most prominent outcome of this fragmentation has been a massive increase in administrative costs, while access to affordable electricity for the common citizen has become more difficult than ever.
Is it not a tragedy that a system once managed by a single institution is now being run by nearly 150 entities, yet lacks direction and leadership? The Ministry of Energy, NEPRA, CPPA, NTDC, and DISCOs are all operating within their respective domains, but there is no single central authority taking full responsibility or defining the overall direction.
If we take the example of the Pakistan Army, it represents a highly organized and integrated system consisting of multiple professional branches such as infantry, artillery, armored corps, air defense, engineers, signals, aviation, logistics, supply, ordnance, electrical and mechanical engineering, medical corps, military police, and intelligence. Each unit functions independently, yet all are guided by a strong central command structure led by the Chief of Army Staff.
In contrast, Pakistan’s power sector, despite appearing structured, lacks such a unified command. While institutions like NTDC, CPPA, NEPRA, WAPDA, IPPs, GENCOs, and DISCOs perform their respective roles, the system as a whole lacks a core command structure.
The fundamental question remains: where is the core system that integrates all these components?
Even if one argues that the Ministry of Energy provides leadership, this claim holds little practical value.
The reality is that for the past 30 years, Pakistan’s power sector has not operated under a single command system. While it formally falls under the Ministry of Energy Power Division, in practice, management, operations, and decision making are distributed across multiple autonomous and semi autonomous entities.
Globally, power systems function effectively only when a central authority or unified leadership controls the entire system in an integrated manner.
Therefore, it is time to learn from past mistakes and rebuild an institution like WAPDA on modern foundations, making it the central authority for the entire power sector to restore coordination, transparency, and accountability.
Reviving WAPDA can bring back the central control that is currently missing. Issues such as poor performance of DISCOs and line losses can be managed more effectively under a unified command, as was once the strength of this institution.
We also know that WAPDA was not dismantled due to any clear failure but rather restructured under a global economic ideology. Today, the question is not why that decision was made, but whether we are willing to reconsider it after experiencing its consequences.
Should the government and the nation seriously evaluate whether a modern, centralized institution like WAPDA can provide direction to the power sector?
It must be understood that restoring WAPDA would not be an unprecedented step but rather part of a global trend. Many countries have already reversed privatization in the energy sector after facing rising costs, unpredictable billing, and declining public trust.
For example, in United Kingdom, serious debate on bringing energy back under state control has reached an advanced stage. France fully nationalized EDF Électricité de France in 2023, establishing 100 percent state ownership to ensure energy sovereignty and long term investment. Similarly, cities in Germany such as Hamburg and Berlin have taken back electricity grids under municipal control, a process known as remunicipalization. Between 2005 and 2016, over 300 such cases were recorded worldwide.
[To be continued in the next episode]
We request you to kindly share your opinion after reading this article.
🔳 Before the current IPP system, Pakistan’s entire electricity system was largely operated under a single institution, WAPDA, which was responsible for power supply across the country. This institution handled generation, transmission, and distribution itself, meaning the system functioned under a unified command, led by the Chairman of WAPDA.
At that time, WAPDA consisted of one Chairman and at most three members, namely Member Electricity, Member Water, and Member Finance. Day to day operations and decision making were entirely managed within this single institution.
During that era, a significant portion of electricity was generated through hydel sources, although not all electricity came from water. A portion was also produced through thermal sources.
WAPDA was established in 1958, at a time when the concept of state owned enterprises was very strong worldwide. This approach was influenced to some extent by socialist economic models. It was widely accepted that essential services such as electricity, water, and roads were the responsibility of the state and should not be treated purely as profit driven activities.
After the collapse of the Soviet Union in 1991, global financial institutions, particularly the International Monetary Fund and the World Bank, promoted a capitalist mindset among bureaucrats and policymakers in countries like Pakistan, emphasizing that the state should not engage in business activities.
In this context, developing countries including Pakistan were encouraged to believe that state owned enterprises were a burden, that the private sector could operate more efficiently, and that electricity generation should be treated as a commercial activity rather than a basic public service.
As a result, under the power sector reforms of 1992, WAPDA was gradually unbundled into separate entities for generation, transmission, and distribution. These institutions were later placed under the Ministry of Water and Power, which today operates as the Power Division under the Ministry of Energy.
When WAPDA was restructured in 1992, there was no concept of circular debt, and there was no major financial burden. Consumers only paid for the electricity they used, with no additional complex charges or hidden financial burdens included in their bills.
(Today, Pakistan’s power sector debt, known as circular debt, has reached approximately 2.5 to 2.7 trillion rupees, and if the liabilities of the Power Holding Company are included, this figure exceeds 3 trillion rupees.)
At that time, Pakistan’s total installed capacity was approximately 7000 to 8000 megawatts, while demand generally remained close to or below that level. Therefore, prolonged and widespread load shedding was not a common issue, and only occasional localized shortages were observed.
The surprising question is: if everything was functioning so effectively, why was such a well organized institution dismantled?
The simple answer is that a new global economic model was being introduced at the time under the banner of “reforms,” commonly referred to as neoliberalism. This model emphasized reducing the role of the state and increasing private sector participation and competition.
This decision was made in collaboration with international financial institutions such as the World Bank and IMF, under which WAPDA was divided into multiple companies.
The process of restructuring began under Nawaz Sharif’s government and was further institutionalized through Benazir Bhutto’s 1994 Power Policy, which gave a central role to IPPs.
As a result, today Pakistan’s power sector is no longer under a single central authority like WAPDA but is divided into approximately 150 administrative and commercial entities.
On one side, there are around 10 distribution companies (DISCOs), 4 generation companies (GENCOs), the National Transmission and Dispatch Company (NTDC), the Central Power Purchasing Agency (CPPA G), the National Electric Power Regulatory Authority (NEPRA), the Ministry of Energy Power Division, WAPDA itself, and separate electricity systems for Azad Jammu and Kashmir and Gilgit Baltistan, totaling around 21 public sector institutions.
On the other side, approximately 100 private power producers (IPPs) operate with their own companies, boards, and long term contracts. In addition, institutions such as the Private Power and Infrastructure Board (PPIB), Alternative Energy Development Board (AEDB), Karachi Electric, and provincial energy departments are also part of the system.
In other words, a power sector that was once managed efficiently under a single strong institution has now become a fragmented, complex, and highly disjointed structure consisting of nearly 140 to 150 entities.
Ironically, the most prominent outcome of this fragmentation has been a massive increase in administrative costs, while access to affordable electricity for the common citizen has become more difficult than ever.
Is it not a tragedy that a system once managed by a single institution is now being run by nearly 150 entities, yet lacks direction and leadership? The Ministry of Energy, NEPRA, CPPA, NTDC, and DISCOs are all operating within their respective domains, but there is no single central authority taking full responsibility or defining the overall direction.
If we take the example of the Pakistan Army, it represents a highly organized and integrated system consisting of multiple professional branches such as infantry, artillery, armored corps, air defense, engineers, signals, aviation, logistics, supply, ordnance, electrical and mechanical engineering, medical corps, military police, and intelligence. Each unit functions independently, yet all are guided by a strong central command structure led by the Chief of Army Staff.
In contrast, Pakistan’s power sector, despite appearing structured, lacks such a unified command. While institutions like NTDC, CPPA, NEPRA, WAPDA, IPPs, GENCOs, and DISCOs perform their respective roles, the system as a whole lacks a core command structure.
The fundamental question remains: where is the core system that integrates all these components?
Even if one argues that the Ministry of Energy provides leadership, this claim holds little practical value.
The reality is that for the past 30 years, Pakistan’s power sector has not operated under a single command system. While it formally falls under the Ministry of Energy Power Division, in practice, management, operations, and decision making are distributed across multiple autonomous and semi autonomous entities.
Globally, power systems function effectively only when a central authority or unified leadership controls the entire system in an integrated manner.
Therefore, it is time to learn from past mistakes and rebuild an institution like WAPDA on modern foundations, making it the central authority for the entire power sector to restore coordination, transparency, and accountability.
Reviving WAPDA can bring back the central control that is currently missing. Issues such as poor performance of DISCOs and line losses can be managed more effectively under a unified command, as was once the strength of this institution.
We also know that WAPDA was not dismantled due to any clear failure but rather restructured under a global economic ideology. Today, the question is not why that decision was made, but whether we are willing to reconsider it after experiencing its consequences.
Should the government and the nation seriously evaluate whether a modern, centralized institution like WAPDA can provide direction to the power sector?
It must be understood that restoring WAPDA would not be an unprecedented step but rather part of a global trend. Many countries have already reversed privatization in the energy sector after facing rising costs, unpredictable billing, and declining public trust.
For example, in United Kingdom, serious debate on bringing energy back under state control has reached an advanced stage. France fully nationalized EDF Électricité de France in 2023, establishing 100 percent state ownership to ensure energy sovereignty and long term investment. Similarly, cities in Germany such as Hamburg and Berlin have taken back electricity grids under municipal control, a process known as remunicipalization. Between 2005 and 2016, over 300 such cases were recorded worldwide.
[To be continued in the next episode]
