Reforming electricity distribution companies.

The article discusses the need for reforming electricity distribution companies (Discos) in Pakistan in order to fix the energy value chain and make electricity more affordable. The Discos face various problems, including governance, pricing, and operations. The first step towards successful reform is eliminating the national uniform tariff, which penalizes efficiency and incentivizes inefficient processes. Incentives should be aligned to improve efficiencies and recoveries, and subsidies should be cascaded down to provinces to create incentives for reducing theft and operational inefficiencies. The article also suggests enabling Discos to enter into bilateral agreements with Independent Power Producers (IPP) to relieve the burden of capacity payments and better manage supply and demand. The governance of Discos can be improved through long-term concession contracts with the private sector, while privatisation may be suitable for Discos with high recovery levels. The ultimate goal is to reduce transmission and distribution losses and make electricity more affordable through reform and restructuring. [Extracted from the article]