Private sector in management of Discos: PC seeks govt’s proactive role to streamline participation

ISLAMABAD: The Privatisation Commission (PC) has sought some actions from the government to streamline participation of private sector in management of Discos and also to hand over some companies to provinces, well-informed sources told Business Recorder.

Sources said the Ministry of Privatisation in May 2021 had submitted a summary before the Cabinet Committee on Privatisation (CCoP) for affirmation of the scope of “private sector participation in management of DISCOs,” as per the recommendations of the Working Group comprising senior officials from Power Division, the Nepra, the World Bank and the Privatisation Commission.

The decision in this regard was taken by the CCoP in its meeting held on May 21, 2021 and entailed a “Concession Model” for eight Discos and Management Contracts for two Discos (Qesco and Tesco). The CCoP, however, in its meeting on June 24, 2022 directed “Power Division to write to all provinces through Ministry of Inter Provincial Coordination (IPC) for negotiations in buying of concerned Discos by the respective province”. Ministry of Energy (Power Division) in line with the CCoP decision, wrote to Ministry of IPC on July 22, 2022.

In the meantime, Sindh Government has also started negotiations with the Power Division for acquiring (provincialisation) of Hesco and Sepco. Power Division constituted a three-member committee on June 20, 2022 comprising senior officials from its Division as well as Government of Sindh. Two meetings of the Committee have been held on June 29 and July 28, 2022 respectively. Privatization Commission (PC) also attended both the meetings on special invitation by the Power Division (Ministry of Energy).

Concurrently, Jehanzeb Khan (SAPM on Effective Governance), while chairing a meeting held on July 19, 2022 on “Prime Minister’s Strategic Road Map on Privatization” directed that “private sector participation in management of DISCOs” to be incorporated in the PM’s Strategic Roadmap.

Power Division was also directed to complete consultative process within one month’s time for the provincialisation of Discos in line with the CCoP decision dated June 24, 2022. Thereafter, the matter will be taken-up with the CCoP for decision/way forward. Privatisation Commission was also directed to prepare necessary documents in the meanwhile for the hiring of Financial Adviser, to be advertised after CCOP’s decision.

Forgoing developments since the CCoP’s decision of May 21, 2021 along with the actions to be carried out under the National Electric Policy issued later in June 2021 and certain changes in Regulatory framework relating to the licensing aspects of DISCOs, the appointment process of Financial Advisor by PC is presently at halt awaiting definite scope for the transaction.

In order to proceed, the following matters were submitted to CCoP for direction: (i) reaffirmation of the CCoP s decision of May 21, 2021 regarding “private sector participation in the management of Discos “ through concession contracts for eight Discos and management contracts for Qesco and Tesco; (ii) subject to approval participation of private sector management offered along with the affirmation whether the supply’ business or wire/transmission’ business or both’ are to be offered; and (iii) Committee constituted (as per directions of CCoP) by Ministry of Energy on July 01, 2021 may be reactivated to engage with labor union in view of the private sector participation in Discos (not privatisation).

Privatisation Commission argues that certain actions as required under National Electric Policy (NEP) and regulatory framework for Discos are directly associated with structuring of the transaction. If the Discos are to be offered for private sector participation, for timely execution of the transaction, the CCOP may accordingly issue necessary direction to Power Division and the Regulator (under section 14 A (5) of NEPRA Act and section 5 (g) of the Privatisation Commission Ordinance, 2000) on the following matters: (i) as per requirement of Section 14A of the NEPRA Act, the National Energy Plan may be finalized; (ii) as per Section 32 of NEPRA Act, investment programs and power acquisitions programs of Discos may be approved by the Nepra for a reasonable period; (iii) as per requirement of NEP 2021, efficient tariff structures for DISCOs may be awarded with DISCOs performance targets revisited to be used as baseline; (iv) as per requirement of NEP 2021, the strategic roadmaps entailing commercial performance milestones may be developed for a suitable period for Discos; (v) as per NEP 2021, the anti-theft initiatives and recovery systems may be institutionalized in each Disco with support of law enforcement agencies and provincial governments;(vi) to have clarity on the term for new licences for the Discos (other than SEPCO& TESCO), decision is issued as per Regulation 5(2) of the Nepra’s Licencing(Distribution) Regulations, 2021; and (vii) a confirmed timeline may be provided for fullest implementation of CTBCM particularly in context of section 5 (1) of PC Ordinance, 2000.

Copyright Business Recorder, 2022