Private sector participation in Discos’ sell-off: Govt approaches World Bank for NLTA

ISLAMABAD: The government has approached the World Bank ((WB) for Non -Lending Technical Assistance (NLTA) to facilitate private sector participation in the privatisation of power Distribution Companies (Discos), well informed sources told Business Recorder.

Economic Affairs Division (EAD), in a letter to World Bank’s Country Director stated that the Ministry of Energy (Power Division) intends to avail WB’s support under Non Lending Technical Assistance for carrying out the following broad activities to facilitate private sector participation in the DISCOs: (i) draft guidelines for private sector participation in DISCOs and the competitive process for inviting the private investors/operators ;(ii) sector financial sustainability and sensitivity analysis including development of sector financial model, framework on uniform tariffs for DISCOs, management of DISCOs liabilities and subsidy management procedure ;(iii) updating licensing eligibility criteria and rules for distribution and for supplier of last resort ;(iv) developing a communication strategy and implementation action plan ; (v) developing/proposing HR strategy and action plan for implementation; and (vi) assessment of impact of market evolution on private sector participation in DISCOs .

Sell-off plan approvals: New independent directors appointed for 9 Discos

EAD has asked World Bank to consider the request of Ministry of Energy (Power Division) and indicate its commitment to support the proposal under NLTA.

Recently, a high level meeting presided over by the Prime Minister, Shehbaz Sharif decided to privatise certain power distribution companies.

In Phase-I, IESCO, Gepco, and FESCO will be fully privatised, followed by LESCO, MEPCO, and HAZECO in Phase-II. SEPCO, HESCO, and PESCO will be offered long-term concession agreements to the private sector, while TESCO and QESCO will remain under government control due to their unique conditions.

The Privatisation Commission has been directed to hire a transaction advisor and complete necessary formalities to finalize Phase-I transactions by January 2026. The Power Division will engage a technical advisor to review the regulatory and policy framework for the privatisation and outsourcing of Discos.

The Government recently obtained approval of a new Board of Directors of Discos from the Cabinet Committee on State Owned Enterprises (CCoSOEs), after issuance of Ordinance to remove existing Boards as the proposal of Power Division to sack Boards of Discos was not in line with the SOE’s law.

There are suspicions that some of the new Board Members have ‘links’ with some potential investors who are keen to buy stakes in Discos. However, official circles are denying such speculations.

The new Boards will help government to expedite privatisation process of Discos as per the government’s approved plan, the sources added.

Copyright Business Recorder, 2024