The return of centralised control—II

PPMC, regulators and the fragmentation of energy planning

Pakistan’s power sector shows how reform can be reversed without being formally abandoned. Companies are corporatised, boards appointed and regulators established, yet authority repeatedly returns to the centre without matching accountability. Operational control, regulation and energy planning remain blurred, while consumers bear the costs through tariffs, surcharges, taxation or public borrowing.

PEPCO’s institutional afterlife

WAPDA’s restructuring and PEPCO’s role were meant to yield distribution companies governed by boards with real commercial authority. World Bank documentation for the Electricity Distribution Efficiency Improvement Project envisaged PPMC as a monitoring and policy-support institution, not the operational manager of DISCOs.

Our recent interactions with the Hyderabad Electric Supply Company (HESCO) board suggest a substantial gap between that design and current practice. PPMC’s influence risks reducing the board to endorsing decisions made elsewhere. This observation concerns HESCO alone, but warrants closer scrutiny of board independence across the sector.

READ ALSO: The architecture of unaccountability—I

A board cannot provide meaningful governance if it is responsible for performance without authority to decide. Management points to the board, the board to PPMC, PPMC to its monitoring role and the ministry to the company; responsibility disperses while losses remain. Monitoring is legitimate, but substituting for the governing body is not. PPMC’s legal authority and interventions should therefore be disclosed, and boards left free to exercise their lawful powers.

The ministry secretary’s role as Principal Accounting Officer further concentrates control. Financial oversight and accountability to Parliament are essential, but they do not make the secretary a super-CEO of corporatised utilities. When the Principal Accounting Officer directs appointments, procurement, investment and operations, boards and management retain responsibility without authority. The boundary should be explicit: the secretary sets policy and safeguards public resources; boards govern, management operates, and regulators decide independently under the law.

This concentration of authority is magnified by the vast revenues collected through electricity and gas bills. Although these funds remain subject to legal and audit requirements, commitments financed through tariffs and utility cash flows may escape the ex-ante parliamentary scrutiny applied to voted expenditure. Costs can then be passed to consumers through tariffs, surcharges and levies, or shifted to taxpayers through subsidies, guarantees and debt. Socialising costs weakens incentives to test spending against demand, affordability, alternatives and risk. The legacy of some IPP arrangements and long-term LNG commitments shows how obligations made under weak scrutiny can outlast their assumptions. Major commitments funded through utility revenues should therefore require published appraisal, competitive evaluation, independent technical and fiscal review, and subsequent audit comparable to public expenditure.

A framework for integrated energy planning

Pakistan unquestionably needs integrated energy planning. Electricity, domestic gas, LNG, petroleum, refineries, renewables, storage, transport, and industrial demand are economically connected. An investment that appears optimal within the power sector may be costly for the energy system as a whole.

Integrated energy planning needs an institutional home with authority across ministries. A dedicated Integrated Energy Planning Secretariat under the Cabinet Division could provide that mandate while drawing on Planning Commission models and expertise from petroleum, gas, power, industry, finance, provinces and independent specialists. It should protect professional analysis, publish assumptions and place recommendations before the highest level of government.

The task is not another energy model, but an economy-wide process that turns technical analysis into coordinated decisions. The secretariat should connect electricity with other fuels and end uses through inclusive governance, independently reviewable models, transparent assumptions, and aligned national development priorities.

NEPRA and OGRA were created to separate technical and commercial judgment from day-to-day ministerial administration. Their independence weakens when government repeatedly intervenes in tariffs, imposes levies and classifications, or treats regulatory leadership as an extension of the civil service.

Appointments to specialised regulatory posts should turn on expertise in economics, engineering, law, finance and market design, together with independence and integrity—not bureaucratic seniority. A civil servant may be an excellent regulator and a private-sector executive a poor one; professional competence is the test.

Regulators must also accept responsibility. In gas, unaccounted-for losses, differential pricing and allowable-loss rules demand rigorous scrutiny. In electricity, efficient costs must be separated from preventable losses. Regulators cannot simply pass inefficiency to consumers, nor can governments demand artificially low prices while ignoring legitimate costs.

The case for merging NEPRA and OGRA is not administrative tidiness but the growing interdependence of electricity, gas and petroleum markets. Separate regulators can duplicate economic, legal and data functions and apply inconsistent assumptions to pricing, investment and consumer protection. A phased merger into an independent energy regulator would create a common evidence base, improve scrutiny of costs that move between markets and support coherent decisions on gas-to-power substitution, storage, and networks. Specialised electricity, gas and petroleum divisions should retain sector expertise, supported by shared analytical services, transparent decisions and statutory safeguards for independence. The transition must preserve ongoing cases and legal rights, while keeping government policy distinct from regulation.

Modern energy planning requires systems modelling, engineering, data science and commercial expertise, increasingly supported by AI-assisted forecasting. Universities should work with regulators and utilities on demand forecasts, network losses, gas balancing, storage economics and market design. AI can strengthen competent institutions, but cannot compensate for weak governance or unreliable data.

The reform package is clear: autonomous DISCO boards, limited central monitoring, a unified and technically credible regulator with specialised divisions, and integrated planning led by a Cabinet Division secretariat with an economy-wide mandate. The decisive questions are who decides, who answers for mistakes and why consumers repeatedly pay for them.

Urban form is also an energy and regulatory decision

Pakistan’s energy planning cannot be genuinely integrated while ignoring urban form. Dispersed housing schemes lengthen electricity feeders, gas networks, roads and water systems, raising infrastructure costs while locking households into longer commutes and greater fuel consumption. Compact, connected development can lower service costs and make mass transit, district infrastructure and reliable utility provision more economically viable.

The Planning Commission’s 2011 Framework for Economic Growth argued for reforming the economic “software” of growth—institutions, incentives, competitive markets, connectivity and productive cities—rather than treating construction as an end in itself. Its emphasis on density and mixed use directly affects electricity demand, transport energy, gas networks and infrastructure investment.

In Order without Design (2018), Alain Bertaud argues that urban productivity depends on labour-market reach, mobility and land-use regulation. Planning is not merely drawing master plans and imposing restrictions. Limits on suitable building heights in serviced areas can push development to the fringe, where utilities cost more per user.

Integrated energy planning should therefore incorporate urban density, transport demand, building efficiency and the location of industry and housing, aligning energy forecasts with sustainable urban growth.

Neither a tall building without water, sewerage, fire safety and transport nor a concrete-covered neighbourhood without trees is successful densification. Regulators, metropolitan governments and planners must coordinate development with infrastructure capacity, while protecting green corridors and accessible parks as essential urban assets.

Roads, energy and the cost of planning in silos

The same failure of integrated thinking is visible in Islamabad’s transport infrastructure. In one of our articles, we compared power plants built without adequate transmission with underpasses built without adequate public transport, water, drainage, housing or municipal services. In both cases, attention centres on a visible asset while the supporting system needed to make it productive is neglected.

The October 6 ground-breaking of the Kashmir Chowk underpass, reported at about Rs1.4 billion, sharpens the issue. A capital city cannot assess roads separately from land use, energy demand, fuel imports, air quality, public transport, or utility costs. Extra road capacity may ease one junction while encouraging longer trips and dispersed development.

Cities must be understood through land markets and mobility, not administrative blueprints alone. Glaeser similarly finds that transport infrastructure does not transform cities without complementary investment, including education. Energy planning that ignores how cities grow, how people travel and where businesses cluster is not integrated. Reform will succeed only when authority, expertise and responsibility are aligned.

(To be continued tomorrow)

Copyright Business Recorder, 2026