SOEs block private players in Pakistan's power sector: CCP

November 11, 2024 (MLN): The Competition Commission of Pakistan (CCP), in its research report titled "State of Competition in Key Markets in Pakistan: Power Sector," highlighted that the dominance of state-owned enterprises (SOEs) in the transmission and distribution segments leaves little room for private entities, creating entry barriers and limiting market dynamics.

The report highlights the significant presence and impact of state-owned enterprises (SOEs) on competition within the power sector, offering strategic insights for fostering a more competitive market environment.

Chairman of CCP, Dr. Kabir Ahmed Sidhu, in his message emphasized the critical role of a competitive power sector in driving economic growth and ensuring affordable energy for consumers.

“This report is a testament to CCP’s commitment to promoting fair competition and addressing market inefficiencies in every sector of the economy,” he stated.

The report outlines the structural, regulatory, and strategic challenges faced by Pakistan's power sector, which has long been dominated by SOEs.

It includes CCP's comprehensive recommendations to address multiple challenges facing the power sector.

These recommendations aim to remove barriers to entry, reduce inefficiencies, and create a fair marketplace that encourages private sector participation alongside SOEs.

The key findings of the report include:
• Predominant Role of SOEs: The dominance of SOEs in transmission and distribution segments leaves hardly any space for private entities, creating entry barriers and limiting market dynamics.
• Barriers to Competition: High capital requirements, monopolistic structures, outdated infrastructure, and geographical challenges hinder new market entrants.
• Proposed Reforms: Implementation of the Competitive Trading Bilateral Contracts Market (CTBCM) model, infrastructure investments, and revised tariff policies are among the strategies suggested to stimulate competition.

The CCP envisions this report as a catalyst for policy discussions, collaboration among policymakers, industry stakeholders, and regulatory bodies to foster a competitive and efficient power sector.

CCP has also released a brief video documentary to clearly explain the issues highlighted in the report and to convey the CCP's recommendations concisely. Both the report and the documentary are available on the CCP's website and social media channels.

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