fueling the future - Woodrow Wilson International Center for Scholars

Vladislav Vucetic and Achilles G. Adamantiadeso Privatization: The government strategy to continue privatizationof generation and distribution companies, aimed at selecting owners/operatorswith adequate resources and competence through atransparent and competitive process, is laudable. The governmentmay choose to facilitate privatization with additional support—forexample, by formally guaranteeing government policy and financialundertakings (such as regulatory framework, consumer subsidies,etc.)—to reduce the risk to the private sector and, thus, thecost to investors and, in turn, to consumers.• Power sector investment: Pakistan’s power sector needs to step upinvestments in all segments—generation, transmission, and distribution—toimprove efficiency of the existing system and to expandthe sector to meet new demand. The reform measures listed abovewould create a more transparent and predictable environment for thecompanies operating in the sector (public and private alike) and, inconjunction with the government’s established Private Power Policy,lead to better identification and prioritization of investment projects,faster mobilization of investment financing (from private investors,commercial lenders, international financing organizations, etc.),lower investment cost, and more effective implementation of investmentprojects.• Regional integration: As mentioned in the third section of this essay,Pakistan’s integrated high-voltage national power grid lacks connectionsto neighboring systems, possibly at significant opportunitycosts. In addition to the potential benefits from wholesale electricityimports (such as, possibly, from Central Asia), there are other importantinterconnection benefits: short-term support in emergenciesand major outages, sharing of operating reserves, voltage support,etc. Similarly, Pakistan could benefit from imports of natural gas, assome of the world’s largest producers are in Pakistan’s neighborhood.Imports of electricity (and gas) through regional integration will requirecooperation with other countries in joint investment programs,which would eventually lead to the creation of integrated regionalelectricity (and gas) networks. 21| 128 |