Centre doubts ability of provinces to run Discos credibly

ISLAMABAD: The Power Division has reportedly been directed to move a summary to scrap the decision of elected government regarding provincialisation of power Distribution Companies (Discos), fearing that provincial governments might not be able to run Discos due to their limited expertise, well-informed sources told Business Recorder.

Former Prime Minister Shehbaz Sharif had directed the concerned Ministries/Divisions to prepare a mechanism to hand over Discos to respective provinces that had shown a willingness to accept the Discos with some pre-conditions.

The sources said, Privatisation Ministry, which is now being headed by a close confidante of the Sharifs, Fawad Hasan Fawad, had framed Terms of Reference (ToRs) for the Transaction Advisor (TA) to prepare the structure to hand over Discos to their respective provinces.

Future of Discos: Govt advised to take stakeholders into confidence

However, the caretaker government which is expeditiously taking policy decisions under the umbrella of Special Investment Facilitation Council (SIFC) has decided to annul the decision of elected government regarding provincialisation of Discos.

The high-level Committee established by former Prime Minister Shahbaz Sharif in its meetings on April 17, 2023 and May 25, 2023 deliberated on the need to appoint a Transaction Advisor (TA) to assist in the transfer of ownership of Discos to provinces.

In the meeting held on May 25, 2023, the Committee inter alia decided: (i) Ministry of Energy (Power Division) will move a summary for CCI to obtain approval in principal for allowing Provincialisation of Discos; and (ii) Ministry of Privatisation in consultation with Ministry of Energy (Power Division) will finalize the ToRs for the Transactional/Financial Advisor. Ministry of Energy (Power Division) will circulate the said ToRs to all stakeholders.

The sources further stated that previously the SIFC had directed Privatisation Ministry to move a summary to scrap the decision of former government but now this responsibility has been assigned to the Power Division, which is responsible for their entire affairs except privatisation.

Privatisation Ministry recently held a meeting with International Finance Corporation (IFC), an arm of World Bank, and sought the former’s help to select a viable option with respect to Discos future.

The sources said, Power Division will finalize an amendment in NEPRA Consumer Service Manual to include electricity in essential services in accordance with Pakistan Essential Services Act 1952.

A summary on following items pertaining to formulation of anti-theft taskforce in HESCO would be submitted to Cabinet i.e. establishment of a Performance Management Unit comprising officers from various departments and agencies and directions for NADRA/IMPASS and other organizations to link the domiciles/bank accounts, etc, with clearance of dues.

The World Bank has proposed ‘Pakistan Model’ to hand over Discos to the private sector for 20 years with equity injection of Rs 728 billion without any cash impact, layoffs or transfer of government assets.

According to the roadmap, transfer of government assets to private parties and the prospect of staff layoffs draws a strong negative reaction in Pakistan, therefore, under the ‘Pakistan Model’ for private participation, the Disco assets will remain in the ownership of the government and there will be a moratorium on staff layoffs for a prescribed number of years after the private operator takes over.

Copyright Business Recorder, 2023