YEARS before I joined K-Electric. I led a large industrial company facing a choice many Pakistani manufacturers know well: keep relying on grid electricity or invest in captive generation. We chose captive power because it made better commercial sense than buying from the grid at prevailing tariffs. operating conditions.
Years later, as COO Distribution at K-Electric, I saw the same issue from the other side. That experience taught me a critical lesson: Pakistan’s power sector is not only challenged by consumers it cannot collect from,. increasingly by the consumers who can pay.
As the government moves to privatise electricity distribution companies (Discos), the debate has focused on losses. Can private owners improve collections, reduce theft, and run utilities more efficiently? Those are important questions, but they risk obscuring a deeper one. What happens when a utility steadily loses the customers that make it financially viable?
Most reform discussions focus on bad load, electricity that is stolen, unpaid for, or hard to recover. Yet the sector may be overlooking an equally important problem — the gradual loss of good load. That distinction matters because it changes how we think about reform.
Pakistan’s power sector does not simply have an inefficiency or a theft problem. Increasingly, it has a customer problem.
Not all losses are created equal:Pakistan often treats distribution losses as a single problem, but they fall into two categories.
First are technical losses, caused by ageing infrastructure, overloaded transformers, inefficient conductors, poor network design and outdated equipment. Every electricity system experiences them and understands the remedies: modernise networks, upgrade equipment, enforce standards and plan investments carefully.
Second are commercial losses, including theft, illegal connections, meter tampering, billing inefficiencies and poor recovery of dues. These are governance failures shaped by weak accountability, poor enforcement, distorted incentives, political interference and affordability pressures.
That distinction matters because the two problems require different solutions. Engineers can reduce technical losses. Institutions must address commercial ones.
Why cost matters:Commercial losses are often discussed as though they exist independently of electricity prices,. the two are closely linked. When power becomes unaffordable, predictable consequences follow. Some consumers reduce usage, some delay payment, some seek alternatives and some resort to theft. This does not excuse illegal behaviour, but it simply recognises that incentives matter.
For industrial consumers, expensive grid power has accelerated investment in captive generation, solar, and other alternatives. For households, rising costs have pushed those who can afford it towards rooftop solar. batteries, while leaving others with few good options. For utilities, both trends weaken the system’s commercial foundations.
High electricity prices are therefore not just a result of the sector’s problems; they are increasingly becoming a cause of them.
From the perspective of an industrial consumer, investing in captive generation is often a rational economic response. From the perspective of a distribution utility, however, thousands of such decisions collectively erode the financial foundations of the grid.
The customers being lost:Large industrial and commercial consumers are the financial backbone of most electricity systems. Their demand is concentrated, predictable, easy to meter and relatively easy to collect from. A single industrial consumer can account for as much demand as hundreds or even thousands of residential consumers.
From a utility’s perspective, not all units of electricity sold are equal. A financially sustainable power system does not require every unit sold to be easily recoverable. It requires most sales to be commercially recoverable.
For years, industry, large commercial users and low-loss residential areas provided that balance. Today, many of these customers are reducing dependence on the grid because it is no longer their most competitive option. As they leave, the customer mix changes; high-loss consumers make up a larger share of total sales, the financial burden on those who remain increases, tariffs rise further. even more consumers seek alternatives.
Viewed this way. Pakistan’s power sector increasingly resembles a business that is losing its best customers while retaining its most difficult ones.
A major factor here is technological change. Policy cannot block consumers from adopting new technologies simply because the grid needs their demand. Nor can the sector assume customers will stay connected regardless of cost and service quality.
The objective should be to make grid electricity reliable, affordable and competitive enough that consumers choose to remain connected. In a world where demand is no longer captive, the grid must earn its customers.
What privatisation can and cannot do:None of this means privatisation is a bad idea. Private ownership can improve incentives, strengthen accountability and speed up decision-making. But ownership alone cannot solve deeper structural problems.
Pakistan already has experience with private-sector participation in electricity distribution. Better management may improve performance, but it does not eliminate affordability pressures, difficult customer segments, political realities or regulatory constraints.
If years of private sector experience in one utility have not been enough to achieve acceptable loss levels. policymakers should ask what exactly will be different when the next Disco is privatised.
Beyond ownership:The real debate should not be about ownership alone, but about sustainability. Technical losses need engineering solutions. Commercial losses need governance solutions. Long-term financial sustainability requires something more: a power system that remains attractive to the consumers who make it economically viable.
Pakistan’s power sector does not simply have an inefficiency or a theft problem. Increasingly, it has a customer problem. A utility can survive some bad customers but it cannot survive indefinitely if it loses its good ones.
Unless that reality is addressed, privatisation may improve performance,. it is unlikely to deliver the transformation the sector so urgently needs.
The writer is a former chief operating officer Distribution at K-Electric. has held senior leadership positions in Pakistan’s industrial and corporate sectors.
asifsaad64@yahoo.com
Published in Dawn, June 17th, 2026
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