ISLAMABAD: Prime Minister Shehbaz Sharif has directed the Power Division to simultaneously pursue two options— Provincialisation and privatisation of Power Distribution Companies (Discos)— to ensure that the transactions are completed as committed to development partners, well-informed sources told Business Recorder.
At a recent meeting on power tariff reduction and the Provincialisation of Discos, the Prime Minister instructed the Power Division to thoroughly explore the option of transferring the ownership and control of Discos from the federal government to provincial governments to be undertaken in consultation with the provinces, with a roadmap and timeline prepared for the Prime Minister’s review and approval.
It was also decided that the Power Division would work in parallel on privatisation of the Discos identified for the first phase— namely IESCO, FESCO, and GEPCO.
3 Discos being readied for privatisation
The Power Division has been tasked with adhering to the agreed schedule, completing all necessary actions (conditions precedents) before January 31, 2025.
The Privatisation Commission (PC) has requested an update from the Power Division regarding the implementation status of these Conditions Precedent (CPs), including the recognition of various off-balance-sheet liabilities in accordance with applicable financial and corporate reporting requirements.
In a recent communication, the Privatisation Commission referenced a decision made by the Cabinet Committee on Privatisation (CCoP) dated August 2, 2024, which was ratified by the federal cabinet on August 8, 2024. The decision outlines a phased privatization of Discos, either through equity sales or concession contracts.
The Privatisation Commission has noted that the Power Division, in consultation with relevant stakeholders, is actively working to implement the necessary prior actions and Conditions Precedent (CPs) to facilitate the privatisation process.
Currently, the Privatisation Commission is finalising the selection of a Financial Advisor for the first phase of the Discos’ privatisation.
Sources have confirmed that the Privatisation Commission has requested the Power Division to provide updates on the following identified CPs: (i) notify licence eligibility criteria rules; (ii) notify licence eligibility regulations; (iii) notify separate performance standards for distribution and supply (from existing standards) ;(iv) notify power acquisition/ power procurement regulations applicable to suppliers;(v) modify and notify tariff rules to address uniform tariff; (vi) modify current tariff guidelines to accommodate distribution licencee and supplier of last resort; (vii) clarify subsidies for Nepra consideration and in notifying tariffs; (viii) notify guidelines on how Discos can request and recover subsidies; (ix) clean up Discos’ balance sheets; (x) complete the process for issuance of shares in Discos; (xi) develop future mechanism for timely payments against government dues (TDS, FATA/ AJK, etc.); (xii) as per requirement of National Electricity Policy (NEP), efficient tariff structures for Discos may be awarded and Discos target may be revisited as stated in NEP; (xiii) as per requirement of NEP, the strategic road maps entailing commercial performance milestones may be developed for each Disco; (xiv) as per NEP, the anti-theft initiatives and recovery systems may be institutionalized in each Disco with support of law enforcement agencies and provincial governments; (xv) there are various off-balance sheet liabilities of Discos which need to be recognised as per applicable financial and corporate reporting legal requirements; (xvi) define eligibility criteria for customers who can choose their supplier; (xvii) licence regime of Discos is due to be changed after expiry of their existing validity till 2022 safeguarding the wire and retail business of Discos; (xviii) CTBCM is due to be effective soon impacting the exclusivity of Discos in their existing service jurisdictions; and (xix) a confirmed timeline may be provided for full implementation of CTBCM.
Copyright Business Recorder, 2025
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