Natural Monopoly, Public Trust and Vested Interests: Case of Power Sector in Pakistan

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Policy Perspectives: The Journal of the Institute of Policy Studies

Volume 11, Issue 2

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Natural Monopoly, Public Trust and Vested Interests: Case of Power Sector in Pakistan

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Author(s): Naheed Zia Khan

Publication date (Print): 2014

Journal: Policy Perspectives: The Journal of the Institute of Policy Studies

Publisher: Pluto Journals

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Abstract

The advent of neo-liberalism in the last quarter of 20 ^th century was a landmark development in the modern history of economic activity. One of the major features of the neo-liberalist counter-revolution, as opposed to the Keynesian interventionist revolution, was privatization of public utilities which were globally operating as natural monopolies in the state sector. The biggest of the latter universally existed in the power sector. Notwithstanding the global wave of power sector reforms and persistent deficit of financial resources and public trust in the corresponding sector of Pakistan, reforms of GENCOs and privatization of DISCOs in the country remain an unfulfilled promise and a wishful thinking respectively. This paper looks into the factors justifying the privatization of state monopolies in the power sector world over and attempts to make a similar case for Pakistan, advocating a consistent, gradual and sustainable process of reforms to protect societal welfare, save on public resources and help boost up industrial production. It is argued that vested interests are having formidable strongholds in the power sector of Pakistan, while economic theory and universal empirical evidence no longer favor the monopoly in electricity generation and distribution. The findings of study lead to the conclusion that world of 21 ^st century is being led by enterprising investors with bags full of money and a preparedness to welcome risk wherever the niche exists in the market. It is recommended that tangibly concrete efforts should be made to build up the confidence of domestic and foreign investors in the profitability potential of large scale industry of Pakistan; specifically, power sector reforms ought to be the frontline item of public policy agenda, given the current state of affairs regarding electricity supply to domestic and commercial users.

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Author and article information

Journal

Journal ID (doi): 10.13169

Journal ID (publisher-id): polipers

Title: Policy Perspectives: The Journal of the Institute of Policy Studies

Publisher: Pluto Journals

ISSN (Print): 18121829

ISSN (Electronic): 18127347

Publication date (Print): 2014

Volume: 11

Issue: 2

Pages: 29-56

Affiliations

Dr. Naheed Zia Khan is Professor of Economics at Fatima Jinnah Women University, Rawalpindi.

Article

Publisher ID: polipers.11.2.0029

DOI: 10.13169/polipers.11.2.0029

SO-VID: 5486bc67-7778-4cd0-bb38-40176503a2dc

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All content is freely available without charge to users or their institutions. Users are allowed to read, download, copy, distribute, print, search, or link to the full texts of the articles in this journal without asking prior permission of the publisher or the author. Articles published in the journal are distributed under a http://creativecommons.org/licenses/by/4.0/.

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ScienceOpen disciplines: Education,Religious studies & Theology,Social & Behavioral Sciences,Law,Economics

References

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Comments

Comment on this article

[1] Chesshire, J. H. “UK Electricity Supply under Public Ownership.” in The British Electricity Experiment: Privatization-the Record, The Issues, The Lessons edited by J. Surrey. London: Earthscan, 1996.

[2] Dubash, N. K. (ed). Power Politics: Equity and Environment in Electricity Reform . Washington D.C.: World Resources Institute, 2002.

[3] Eichenwald, K. Conspiracy of Fools: A True Story . New York: Broadway, 2005.

[4] Estache, A. and A. Coicoechea. “How Widespread were Private Investment and Regulatory Reform in Infrastructure Utilities during the 1990s?” World Bank Policy Research Working Paper, no 3595 (2005).

[5] Fligstein, N. The Transformation of Corporate Control . Cambridge: Harvard University Press, 1990.

[6] Guthman, Jhon. “Neoliberalism and the Making of Food Politics in California.” Geoforum 39, no. 3 (2008).

[7] Hall, D. Evaluating the Impact of Liberalisation on Public Services . U.K.: Public Service International Research Unit, Business School, University of Greenwich, U.K, 2005.

[8] Hall, David, Emanuele Lobina, and Robin de la Motte. “Public Resistance to Privatisation in Water and Energy.” essed on October 17, 2013. Development in Practice 15, no. 3 & 4 (June 2005). http://www.psiru.org/reports/2005-06-W-E-resist.pdf (accessed October 17, 2013).

[9] Heddenhausen, M. Privatization in Europe's Liberalized Electricity Markets-The Cases of the United Kingdom, Sweden, Germany and France . SWP: Research Unit EU Integration, 2007.

[10] Heiman, M. and B. Solomon, “Power to the People: Electric Utility Restructuring and the Commitment to Renewable Energy.” Annals of the Association of American Geographers 94, no. 1 (2004).

[11] Hirsh, R. F. Power Loss: The Origins of Deregulation and Restructuring in the American Electric Utility System . Cambridge: MIT Press, 1999.

[12] Hunt, S. and G. Shuttleworth. Competition and Choice in Electricity . New York: John Wiley and Sons, 1996.

[13] Hyman, L. S. America's Electric Utilities: Past, Present, and Future ., Arlington, VA: Public Utilities Reports, Inc., 1992.

[14] ICCI. An Overview of Electricity Sector in Pakistan . Islamabad: Islamabad Chambers of Commerce and Industry (ICCI), 2012.

[15] IEA. Electricity Market Reform: An IEA Handbook . Paris: OECD/International Energy Agency(IEA), 1999.

[16] IEA. Key World Energy Statistics 2013 . Paris: International Energy Agency (IEA), 2013.

[17] IGI Securities. Power Sector Update . Karachi: Research Department, 2010.

[18] Jhirad, D. “Power Sector Innovation in Developing Countries: Implementing Multifaceted Solutions.” Annual Review of Energy 15 (1990).

[19] Jones, R. S. and M. Kim. “Restructuring the Electricity Sector and Promoting Green Growth in Japan.” OECD Economics Department Working Papers , no. 1069, 2013.

[20] Karekezi, S. and J. Kimani. “Status of Power Sector Reform in Africa: Impact on the Poor.” Energy Policy 30, no. 11-12 (2002).

[21] Littlechild, S. “Municipal Aggregation and Retail Competition in the Ohio Energy Sector.” Journal of Regulatory Economics 34, no. 2 (2008).

[22] MacKerron, G. and I. Boira-Segarra. “Regulation.” in The British Electricity Experiment: Privatization-the Record, The Issues, The Lessons edited by J. Surrey. London: Earthscan, Londan, 1996.

[23] Midttun, A. and S. Thomas. “Theoretical Ambiguity and the Weight of Historical Heritage: A Comparative Study of the British and Norwegian Electricity Liberalisation.” Energy Policy 26, no. 3 (1998).

[24] Millward Robert. Private and Public Enterprise in Europe: Energy, Telecommunications and Transport 1830–1990 . New York: Cambridge University Press, 2005.

[25] Newbery, D. M. and R. Green. “Regulation, Public Ownership and Privatisation of the English Electricity Industry.” in International Comparisons of Electricity Regulation edited by R. Gilbert and E. P. Kahn. Cambridge: Cambridge University Press, 1996.

[26] OECD. Application of Competition Policy to the Electricity Sector . Paris: OECD/GD, 1997.

[27] OSEC. “Pakistan Power Sector.” Report Compiled by Consulate General of Switzerland in Karachi, 2011.

[28] Patterson, W. Transforming Electricity . London: Earthscan, 1999.

[29] Peck, J. and A. Tickel. “Conceptualizing Neoliberalism: Thinking Thatcherism,” in Contesting Urban Futures: Decentring Neoliberalism edited by H. Leitner, E. Sheppard, K. Sziarto and A. Maringanti. New York: Guildford, 2007.

[30] Peck, J. and A. Tickel. “Neoliberalizing Space.” Antipode 34, no. 3 (2002).

[31] Perrow, C. Organizing America: Wealth, Power, and the Origins of Corporate Capitalism . Princeton, NJ: Princeton University Press, 2002.

[32] Roy, W. Socializing Capital: The Rise of the Large Industrial Corporation in America . Princeton, NJ: Princeton University Press, 1997.

[33] Solomon, B. and M. Heiman. “The California Electric Power Crisis: Lessons from other States.” The Professional Geographer 53, no. 4 (2001).

[34] Sovacool, B. K. The Dirty Energy Dilemma: What's Blocking Clean Power in the United States . United States: Praeger, 2008.

[35] Tagare, D. Electricity Power Generation: The Changing Dimensions . Wiley: IEEE Press, 2011.

[36] Tesauro, G. “Market Power in Electricity Markets: Regulation, Deregulation and Competition-Lessons from the Italian Experience and other European and U.S. Case Studies.” Fordham International Law Journal 25, no. 4 (2001).

[37] Timothy, J. B., K. L. Palmer and S. A. Martinez. Alternating Currents: Electricity Markets and Public Policy . Washington D.C.: Resources for the Future, 2002.

[38] Williams, J. H. and N. K. Dubash. “Asian Electricity Reform in Historical Perspective.” Pacific Affairs 77, no. 3 (2004).

[39] Williams, J. H. and R. Ghanadan. “Electricity Reform in Developing and Transition Countries: A Reappraisal.” Energy , no. 31(2006).

[40] World Energy Council. Roadmap towards a Competitive European Energy Market . London, 2010. www.worldenergy.org/events/world_energy_congress/ (accessed September 01, 2013).