PIA, Discos sell-off bids falter: Senate panel taps ex-ministers for guidance

ISLAMABAD: The Senate Standing Committee on Privatisation has decided to invite former ministers for privatisation for the last 10 years to hear their views on continuous failure of PIA and Discos privatisation attempts.

According to the minutes of Senate Standing Committee on Privatisation held recently, Federal Minister for Privatisation, Aleem Khan highlighted the losses of PIACL amounting to Rs. 830 billion out of which 623 billion was parked within the company. The remaining Rs 200 billion was parked in PIACL out of which Rs 160 billion were calculated as assets and around Rs 45 billion turned out to be the deficit (negative equity).

Federal Minister admitted the unsuccessful bidding process of the PIACL but at the same time they highlighted non-cooperation on part of different government departments particularly FBR, who could not manage to remove the GST liability, one of the major asks of the bidders. Similarly, negative equity of Rs 45 billion remained another hurdle to make the process fruitful.

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While identifying government policy on privatisation, the Federal Minister strongly recommended that in order to make the privatisation process attractive and lucrative in future, the government must get first clear losses of the institutions before presenting them as a potential entity for the buyers.

The Federal Minister recommended the same strategy for privatisation of DISCOs, the process of which is also in full swing.

In response to a presentation, the Committee expressed its displeasure at the unsuccessful bidding process challenging the decision to initiate the bidding.

Chairman Committee while appreciating the expertise of the Federal Minister not only as a political leader but as a business man also questioned him for not carefully handling the Rs 45 billion losses, while losses of Rs 623 billion were handled and tackled well. He emphasised an out-of-box solution in the form of G2G or B2B, so that the matter may be finalized fruitfully.

He further contended that privatisation of PIACL is critical as a way forward to upcoming privatisation of other Government entities.

Secretary Privatisation contended that 95% of the job is already completed and further negotiations are underway with the IMF for removal of GST liability and negative equity, and their response is awaited. Secretary Privatisation also stated that Prime Minister is already engaged with the friendly states for successful privatisation of national entities on G2G basis.

He briefed the Committee on the updated privatisation process of DISCOs and maintained that the plan is to privatise the most profitable DISCOs ie, IESCO, FESCO and GEPCO in first phase, and the less profitable ones would be considered in the second phase.

Secretary Privatisation further noted that hiring of Financial Advisor is a first step in the overall process; and that completion of the process is subject to the report of World Bank, the Non-Lending Technical Assistant (NLTA) and implementation of prior actions suggested by the World Bank regarding privatisation of DISCOs. However, the report of the World Bank is likely to be submitted in 20 days, while only three prior actions are completed out of nine, and some actions may require the approval of the Cabinet also.

Power Division stated that the privatisation process of major DISCOs shall be completed by January 31, 2025, whereas the overall privatisation process of remaining DISCOs would be completed by the end of November 2025.

The Power Division briefed that the more loss bearing DISCOs would be retained by the Government, until they improve their financial health for privatisation.

While responding to the Ministry of Privatisation and Power Division regarding the report ofthe World Bank and prior actions, the Chairman Committee queried as to how the privatisation process of DISCOs would be completed by the end of January 2025whileprior actions have not yet been done. The Chairman Committee then drew the attention of the ministries towards privatisation of some DISCOs ten years back and the Power Division pointed out that the privatisation process of those DISCOs was also incomplete even after reaching an advanced level.

The Chairman Committee emphasised that lesson must be learnt from the privatisation process of PIACL and therefore privatisation of DISCOsmust be handled carefully and fruitfully, and expressed concerns regarding the ongoing issues of IPPs as well.

In the previous meeting held on October 03, 2024, the Committee had recommended the Power Division to submit the World Bank report. However, the report is not yet submitted and requires a further period of 15-20 days to deliberate on the matter.

After detailed discussion the Committee recommended that the former Ministers for Privatisation during the last 10 years be taken on board and invited to the next meeting of the Committee to deliberate on ‘why the privatisation of PIACL and DISCOs could not materialize during their tenures even after reaching an advanced level.

The Committee recommended that presence of bidders of PIACL be ensured in the upcoming meeting of the Committee adding that particulars of the bidders be also provided to the C=committee to further deliberate on the matter.

The Committee recommended the Power Division submits the report of World Bank on privatisation of DISCOs, as well as the investigation report of FIA on the alleged financial and administrative irregularities by former Chairman of Board of Directors of FESCO.

Copyright Business Recorder, 2024