This study examines the relationship between investment and technical efficiency of distribution utilities in Pakistan from 2006 to 2020. Stochastic Frontier Analysis is used to predict technical efficiency score of distribution utilities in Pakistan. In the second-stage, Pooled OLS is employed to examine the impact of technical efficiency on investment of distribution utilities. Findings of the study reveal an increase in technical efficiency of distribution utilities in Pakistan. Estimates further indicate that technical efficiency significantly affects the investment decisions of distribution utilities significantly affect the technical efficiency of utilities. Findings of the study provide an effective policy tool to attract private investment in electricity distribution networks.

JEL: D24; L51; L94; L95