Govt proposes two-tier model for power distribution companies to introduce competitive electricity supply

The federal government is considering a two-tier structure for privatised power distributors, separating ownership of electricity networks from retail supply, billing and collections, Profit by Pakistan Today reported. The proposal covers FESCO, Gujranwala and Islamabad’s distribution companies, with FESCO potentially first; the Privatisation Commission is seeking to sell it by early next year.

Under the plan, competitive suppliers would take on contracted power capacity alongside the matching customer base, while the network owner would remain a regulated supplier of last resort. Existing uniform tariffs and protections for protected consumers would continue, and customers would still face an idle-capacity charge of Rs17 per unit, so the model is not expected to lower bills immediately. The government expects competition to support modest tariff reductions over time, better bill recovery and lower distribution losses, although rising consumer use of solar power presents a challenge.