Govt’s sell-off agenda attracts World Bank’s attention

ISLAMABAD: Simon Stolp, South Asia Practice Manager for Energy at the World Bank, and his team met with Fawad Hasan Fawad, the Federal Minister for Privatisation in Islamabad.

The primary focus was to discuss the government’s agenda for privatisation, with a specific emphasis on the performance of distribution companies (Discos) in Pakistan’s power sector.

Minister Fawad explained the government’s privatisation agenda, taking into account the legal mandate of the caretaker government, with the aim of assisting struggling Discos and reducing the government’s financial burden through private sector investments.

Privatising Discos to create private-sector monopolies, warns World Bank

The minister also stressed the need for a two-step strategy for privatisation of Discos, potentially involving a concessional model of management control with a subsequent divestment strategy. Discussions with the International Finance Corporation (IFC) regarding a concession model for Discos were highlighted.

The minister for privatisation conveyed that he was actively engaged in discussions with the minister for energy to create a structured timeline for the divestment of Discos, beginning with concession agreements.

Both ministers mutually agreed that this approach represented the most suitable path forward. The federal minister also highlighted the current public opinion favouring privatisation as a means to alleviate the financial burden on the national exchequer.

Stolp reiterated the World Bank’s commitment to supporting different aspects of this transaction in the long term, emphasising the importance of a well-structured transaction template for Discos.

The World Bank’s team of energy specialists pledged to present template for the most suitable mode of privatisation for Discos to ministers of Energy and Privatisation within a week. This template would be refined with expert opinions to support ongoing power sector reform efforts.

This meeting signifies a united effort to reform and privatise Pakistan’s power sector, with the primary goal of addressing financial challenges faced by Discos while promoting economic growth and long-term sustainability. The commitment to this endeavour is strong, with careful consideration given to every aspect to ensure its success.

Copyright Business Recorder, 2023