ISLAMABAD: Prime Minister Shehbaz Sharif has approved bifurcation of Peshawar Electric Supply Company (PESCO) into two Distribution Companies (Discos) i.e. Pesco and HAZECO, official sources told Business Recorder.
Sharing the details, sources said, in 1998, pursuant to the strategic plan for WAPDA, approved by the Council of Common Interest in 1993, WAPDA’s Power Wing was restructured by creating independent power generation, transmission, and distribution companies.
In 1998, initially eight distribution companies were created of which PESCO was tasked with carrying out the power distribution business all over the province of Khyber Pakhtunkhwa as well as the former Federally Administrated Tribal Areas (’FATA). Later on, two more companies namely Sukkur Electric Supply Company (2010) and Tribal Area Electric Supply Company (2013) were created.
Provincialisation of Discos: KP gives ‘conditional’ acceptance to Pesco takeover
The proposal to bifurcate DISCOs covering very large geographical areas, such as PESCO, Quetta Electric Supply Company (’OESCO) and Multan Electric Power Company CMEPCO) have been under consideration for some time. In this regard, the Prime Minister approved the proposal of Power Division moved through a summary on December 30, 2022 to bifurcate PESCO into PESCO and HAZECO (DISCO for Hazara-l and Hazara -II circles) which was notified by Power Division on August 18, 2023.
In the meantime, a Writ Petition No. 674- PnO23 has been filed in Peshawar High Court, whereby the petitioner has raised objections that the approval of Cabinet and CCI was required for establishment of HAZECO. The Court has granted status quo in the matter. The Cabinet has approved appointment of first Independent Directors of HAZECO on June 24, 2023.
Power Division maintained that under the Strategic Plan for WAPDA, the corporate entities such as DISCOs are to be owned by the Federal Government until such time that the sector is eventually privatized. Thus, the shareholding in all DISCOs is presently owned/controlled by the Federal Government, and managed by the Power Division as per entry at Sr. No. 2 (matters relating to electric utilities in Part 31B of Schedule 2 of the Rules of Business, 1973.
Accordingly, shareholding in HAZECO shall also be fully owned by the Federal Government and as per the requirements of the SOEs (Governance and Operations) Act, 2023 and Companies Act, 2017, the Federal Government’s approval will be required to create a new Government-owned company.
Furthermore, under the Companies Act, 2017, any scheme to divide a company and to transfer its assets to two or more companies requires the approval, inter alia, of its shareholder(s). Since shareholding in PESCO is also fully owned/controlled by the Federal Government, its approval shall also be required in this respect.
In view of the foregoing, the Power Division proposed to solicit the approval of the Federal Government for: - (i) creation of a new power distribution company by the name of Hazara Electric Supply Company (HAZECO) to take over PESCO’s power distribution / supply business in the present Hazara-l and Hazara-II circles, and to commence business subject to all legal and regulatory requirements;(ii) authorization to the Power Division to take all steps to affect the incorporation of HAZECO, to formulate and implement the bifurcation plan for PESCO, and for the following officials to act as the initial ‘promoters’ of HAZECO i.e. Secretary, Power Division, Additional Secretary - 1, Power Division and Sr. Joint Secretary (CAD), Power Division and ;(iii) reorganization / restructuring of PESCO by dividing its business and assets between PESCO and HAZECO as per all legal and regulatory approvals.
Copyright Business Recorder, 2023
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