Technical Efficiency in Electricity Generation Sector of Pakistan -- The impact of Private and Public Ownership

This paper conducts a comparative technical efficiency analysis of 21 electricity generation plants (12 private and 9 public) using panel data of 6 years (1998-2003), and two stat-of–the art methodologies: Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA). The results show a mixed technical and scale efficiency scores for the public and private generation plants. There are some public and private firms, which have high technical efficiency scores. However the results also suggest that the public ownership has a negative impact on the technical efficiency of the firms. Due to less apparent differences in production structure between, public and private plants, it is suggested that benchmarking of public firms using private plants as a comparators, is feasible and desirable. On a more empirical basis, our study bridges an important gap in research on the technical efficiency of private and public electricity generation sector.