Provincialisation of Discos: KP gives ‘conditional’ acceptance to Pesco takeover

ISLAMABAD: The government of Khyber Pakhtunkhwa (KP) has expressed conditional acceptance of highly loss-making Peshawar Electric Supply Company (Pesco), as Prime Minister wants provinces to take at least one Disco, well-informed sources told Business Recorder.

On March 15, 2023 Prime Minister Shehbaz Sharif held a high-level meeting on provincialisation of Discos, which was also attended by caretaker Chief Minister KP Muhammad Azam Khan via video conference.

He said due to the poor financial and administrative conditions of the Discos the Federal Government has proposed to shift the financial and administrative responsibility of these companies to the provinces as a consequence of which the burden of Pesco would shift to the Government of Khyber Pakhtunkhwa.

Discos inflict Rs170bn loss on exchequer

According to caretaker Chief Minister, Pesco is currently facing a huge shortfall of approximately Rs. 200 billion per annum along with Rs. 30 billion per annum in receivables.

Chief Minister argued that at present Pesco enjoys a uniform national tariff due to the Tariff Differential Subsidy (TDS) which could be at risk if the existing structure of the power sector is altered.

Moreover, the administrative structure of Government of Khyber Pakhtunkhwa is under severe stress due to the current law & order situation and militancy coupled with low economic and social indicators.

In light of the existing reasons, Chief Minister opined it would not be possible for the province to take over Pesco. However, such a proposal could be considered if generation of power is handed over to the province along with the income from generation of electricity. This will entail handing over of all federally owned hydropower stations to the province.

In this context, he proposed that the report of Deputy Chairman Planning Commission who chaired the “out of box solution committee” may be placed before the Council of Common Interests (CCI) in its next meeting.

Chief Minister further proposed that a ministerial level committee may be set up to deliberate upon the subject of provincialisation of Discos to accommodate the viewpoints of the provinces.

The sources said the letter of caretaker Chief Minister was presented to the Prime Minister, who has directed PMO to place it before the Committee headed by Minister for Defence.

On March 15, 2023, Prime Minister constituted a Committee comprising Khawaja Muhammad Asif, Minister for Defence (Chair), Khurram Dastgir Khan, Minister for Power, Syed Naveed Qamar, Minister for Commerce, Musadik Masood Malik, Minister of State for Petroleum, provincial chief ministers and ministers nominated by CMs, Dr. Muhammad Jehanzeb Khan, Special Assistant to the Prime Minister on Government Effectiveness, Finance Secretary, Secretary Power (Secretary of the Committee), Secretary Privatization Commission, Secretary Law & Justice and Provincial Chief Secretaries.

According to the approved ToRs Terms of Reference (ToRs) of the committee, it was tasked to examine the current constitutional framework for the transfer from federal government to respective provincial governments. It would also chalk-out the list of legal requirements that have to be complied with, and if needed, suggest a legal framework specific for the purpose.

The committee would examine requirements of Nepra with regard to the change of ownership of its licensees and the steps involved therein and examine regulatory requirements of other regulators including the SECP, SBP, and CCP and outline to determine the compliances required for the transfer of ownership of equity.

Copyright Business Recorder, 2023