Global platforms like the United Nations Climate Change Conferences (COP), the World Economic Forum, and the International Energy Agency (IEA) consistently highlight the need for energy efficiency and sustainable consumption. These discussions call on companies to reduce environmental impact while fostering economic growth, a message particularly relevant for Pakistan’s energy landscape. According to experts, Pakistan’s energy challenges can only be addressed through strategic innovation and investment.
With growing populations and rising incomes in developing countries, energy demand is projected to skyrocket. Improved living standards and increased reliance on electronic devices will further drive demand. Therefore, sustainable investment in the power sector is essential for an energy-efficient future. Globally, energy investments are expected to surpass USD 3 trillion in 2024. Notably, three-quarters of this funding is sourced from the private sector.
India, a top producer and consumer of electricity, exemplifies how opening the energy sector to private competition can attract foreign investment. Since enacting the Electricity (Amendment) Bill, which introduced private-sector competition, India has drawn USD 18.28 billion in FDI for its 429.96 GW power capacity. Pakistan can adopt similar models to ensure reliable, sustainable power, thus supporting economic stability and growth. Key sectors—power generation, transmission, distribution, and tariffs—need sufficient investment to create a stable infrastructure that fosters business growth, foreign investment, job creation, and economic activity.
A dependable power supply sends a strong signal to investors about a country’s conducive business environment. Currently, Pakistan faces a power shortage of 3,000-4,000 MW, an issue that requires private-sector involvement. Encouragingly, a private power utility in Karachi plans to invest over USD 2 billion in transmission and distribution from FY24 to FY30, drawing foreign investors’ interest.
This example underscores the need for vertically integrated power utilities capable of managing generation, transmission, and distribution. In another promising step, Pakistan’s Privatization Commission Board has approved the divestment of several state-run power distribution companies (DISCOs), aiming to complete the legal formalities by 2025. The initial phase will privatize three DISCOs, with a financial advisor appointed to support this process. Additionally, the China-Pakistan Economic Corridor (CPEC) is anticipated to bring another USD 4 billion to Pakistan’s power sector, with early CPEC projects set to boost capacity by 10,400 MW through hydropower, coal, wind, solar, and LNG projects.
Historically, Pakistan’s state-run power companies have struggled to meet demand, making privatization a promising avenue to introduce efficiency, grid improvements, and renewable energy solutions. Effective allocation of public and private resources can ensure that Pakistan’s energy companies are well-positioned to meet growing demands while achieving sustainability goals. This investment supports job creation across power plants, grid networks, construction, and engineering, contributing to a robust, sustainable economic foundation for Pakistan’s future.
