Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, chaired the second meeting of the Steering Committee on Power Sector Regulatory Regime at the Finance Division today to review progress and advance reforms aimed at strengthening the regulatory framework of the power sector and promoting efficiency, investment, competition and greater private-sector participation.
The Committee received an update on the ongoing work on Pakistan’s power sector transformation and discussed the significant changes taking place in the industry, including growing solarisation and changing demand patterns. The Finance Minister noted that the evolving power sector landscape required a regulatory framework capable of responding to technological developments while supporting efficiency, investment, consumer interests and greater private-sector participation.
The Committee discussed key structural and emerging challenges facing the sector, including legacy capacity obligations, changing grid-demand patterns, service quality, investment constraints and the need to further strengthen incentives for efficiency. The discussion also focused on improving regulatory predictability, better targeting of subsidies and strengthening the overall investment climate to support a more efficient, competitive and financially sustainable power sector.
The Finance Minister emphasized the need to develop a market structure that provides clearer incentives for efficiency and service quality, while creating greater space for competition, private-sector participation and investment. The Committee discussed the potential for greater separation between network and supply functions, with distribution network operators focused on the efficient operation and maintenance of the network, while competitive supply businesses operate within an appropriate regulatory framework.
The Committee also discussed the need for a predictable and transparent regulatory regime, including appropriate risk allocation, clearer licensing arrangements and tariff methodologies that support investment while protecting consumer interests. The Finance Minister emphasized that the reform process should seek to improve financial sustainability, reduce inefficiencies and create an environment conducive to long-term private investment.
The meeting also considered opportunities arising from the changing power sector landscape, including the accelerated deployment of battery energy storage systems (BESS) and other technologies. The Committee discussed the potential for distribution companies to undertake appropriate ancillary and infrastructure-related businesses, including through separate entities or special-purpose vehicles, where such activities can improve asset utilisation, generate additional revenues and ultimately benefit consumers.
The Finance Minister stressed that any such additional commercial activity should be undertaken within a clear regulatory framework, with appropriate safeguards and transparency, ensuring that benefits arising from the use of public infrastructure are appropriately shared with consumers.
The Committee further discussed measures to improve the targeting and effectiveness of government support, while ensuring that the reform process remains focused on financial sustainability, improved service quality and affordability for consumers.
The Finance Minister emphasized that the emerging regulatory framework should provide sufficient flexibility to accommodate technological change, including distributed generation, storage and electric mobility, while maintaining system reliability, encouraging efficient investment and creating opportunities for private-sector participation.
The Committee was also briefed on the proposed programme of the Technical Working Group, including its Terms of Reference and work on the tariff methodology. The Finance Minister directed that the Technical Working Group undertake a structured and consultative process, incorporating the views of relevant stakeholders and developing practical recommendations for consideration by the Steering Committee.
Senator Muhammad Aurangzeb emphasized that the reform process should be iterative, evidence-based and aligned with the broader objective of creating a financially sustainable, efficient and competitive power sector. He stressed the importance of maintaining stakeholder ownership while ensuring that the work progresses within clear timelines and leads to actionable recommendations.
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 officials of the Finance Division, and representatives of relevant public-sector institutions and stakeholders.
