An assessment of power sector reforms and utility performance to strengthen consumer self-confidence towards private investment

Pakistan's power sector has undergone significant reforms since 1994 to improve technical and financial performance. This study aims to measure the post-reform efficiency dynamics of electricity distribution utilities from 2015 to 2019 by taking Islamabad Electric Supply Company (IESCO) as a case study. The study also assesses the role of consumers' self-confidence in a particular business environment to participate as investors in the electric utility sector. The total factor productivity index and PLS-SEM approach were applied to validate the framework empirically. Results from the former show negative growth, as all index components remained negative except for efficiency change. It has been concluded that the standard of governance improves the business environment of the utility sector, which does not adequately describe the industrial performance of Pakistan's utility sector. Moreover, consumer self-confidence (e.g., information acquisition confidence and social outcome confidence) significantly mediates between the business environment and industrial output. Thus, consumer self-confidence is a prerequisite to maximizing industrial growth in the utility sector. Practitioners should launch a policy framework to enhance consumer self-confidence in the local context and, as a result, enhance the electric utility sector's industrial growth. (C) 2021 Published by Elsevier B.V. on behalf of Economic Society of Australia, Queensland.

Automated summary

Pakistan's power sector has undergone significant reforms, and the study indicates that consumer self-confidence plays a crucial role in the industrial growth of the electricity utility sector.