The power sector's transition from vertically integrated utilities (VIUs) to a competitive market structure has been a global trend since the 1980s, aimed at enhancing competition, efficiency, liquidity, reducing costs, and improving service quality. In the context of the Government of Pakistan (GoP), several challenges have hindered this transition since three decades. The heavy concentration of investment, operations, revenues, payments, and returns within government-controlled entities creates inherent conflicts of interest and barriers to privatisation and competition. This often leads to inefficient decision-making, bureaucratic delays, deteriorating service and a lack of accountability. Additionally, political influence over the sector results in decisions that are more politically motivated than economically rational, further impacting meritocracy, efficiency and performance. Despite the approved WAPDA restructuring strategic plans set in the 1990s, the pace of implementing market reforms has been slow over the last three decades, and the persistence of monopolistic structures hampers competition and innovation. The transition from VIUs to unbundled and corporatised entities (generation, transmission, system & market operations, distribution and supply business) is partial, government controlled leaving inefficiencies and a lack of true market competition. Furthermore, regulatory bodies often lack the independence and authority needed to enforce market rules and ensure transparent regulations and fair competition, while limited capacity within regulatory and institutional frameworks impedes effective oversight and enforcement for the government owned businesses.
