Business Recorder
ISLAMABAD: The Auditor General of Pakistan (AGP) has urged the Ministry of Energy (Power Division) to undertake a comprehensive review of the PEPCO-led restructuring framework to identify implementation gaps and determine a way forward, sources in the Power Division told Business Recorder . According to the Audit (Power) report on the impact of WAPDA’s unbundling, the government—under the Action Plan for power sector restructuring approved by the Cabinet and the Economic Coordination Committee (ECC)—mandated the creation of the Pakistan Electric Power Company (PEPCO) as a wholly government-owned corporate entity with a time-bound and specialised role. PEPCO was tasked with overseeing the transition of WAPDA’s power wing into twelve corporatised entities, establishing sound corporate governance structures, recruiting professional management and independent boards on market-based terms, improving operational efficiency and financial sustainability, and preparing these entities for privatisation within approximately two years. Following completion of this process, PEPCO itself was to be dissolved. READ ALSO: BR RESEARCH: Power sector fixes: Financial band-aids, structural bleeding The Action Plan further envisaged PEPCO as the principal driver of reforms, responsible for resolving implementation bottlenecks through policy coordination and maintaining reform momentum to shift the sector from a command-and-control structure to commercially operated, creditworthy utilities. However, the audit observed that PEPCO failed to achieve its core objectives. While the corporatisation of WAPDA’s power wing into separate generation, transmission, and distribution companies was formally completed, the critical subsequent phases—operational restructuring, financial self-sufficiency, governance strengthening, and preparation for privatisation—were not effectively implemented. Contrary to the planned two-year transition period, PEPCO continued to operate for an extended duration without delivering the intended outcomes. Most distribution companies (DISCOs) remained under government control, characterised by weak financial positions, persistent losses, and continued reliance on subsidies and sovereign support. The audit further noted that PEPCO was unable to institutionalise professional and independent boards or introduce market-oriented management across successor entities. As a result, these companies largely continued to function under centralised government control, undermining the objectives of corporatisation and commercialisation. Consequently, the power sector reform process remained incomplete, leading to prolonged government involvement in commercial operations, deterioration in the financial health of DISCOs, accumulation of losses and circular debt, and continued dependence on government subsidies and guarantees. Copyright Business Recorder, 2026
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