3 up for grabs in first phase: Provinces appear unwilling to buy Discos: PD

ISLAMABAD: The Power Division on Monday stated that provinces appear unwilling to purchase the Distribution Companies (Discos), with three Discos to be privatized outright in the first phase.

Secretary of Power Dr Fakhre Alam Irfan testified before the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz, that, “I have written letters to the Provincial Chief Secretaries offering them the option to purchase Discos in their respective provinces, but I have not received any response, which indicates they are not interested in purchasing them.”

These comments follow the Prime Minister’s directive to the Power Division to explore the possibility of transferring the ownership and control of Discos from the federal government to provincial governments.

Privatisation of Discos: PM directs a two-pronged plan

This process is to be carried out in consultation with the provinces, with a roadmap and timeline prepared for the Prime Minister’s review and approval. The Power Division is also working on the privatization of three Discos identified for the first phase— namely, IESCO, FESCO, and GEPCO.

Dr. Irfan briefed the Committee that the Cabinet, in its meeting on August 13, 2024, approved the following plans for privatization: (i) phase 1: Outright privatization of IESCO, FESCO, and GEPCO; (ii) Phase 2: Privatization of LESCO, MEPCO, and HAZECO;(iii) Concession Model: HESCO, SEPCO, and PESCO through long-term agreements and ;(iv) Retention: TESCO and QESCO.

Dr. Irfan also shared that the appointment of a Financial Advisor (FA) is currently in process within the Privatisation Commission (PC). The first tender was issued on August 17, 2024, with a closing date of September 16, 2024. However, after evaluating the technical and financial bids, the PC Board decided on September 30, 2024, to cancel the process and restart the FA hiring process from the panel of pre-qualified firms.

He noted that two FA consortiums have applied in response to the second advertisement, and it is expected that the FA will be finalized within two weeks. Meanwhile, the Power Division is completing the necessary Conditions Precedent (CP), including the transfer of shares from WAPDA to the President of Pakistan and, subsequently, to the respective Discos. This process is expected to be completed by January 31, 2025.

Senator Syed Shibli Faraz, Leader of the Opposition in the Senate, suggested that the government should offer investors one well-performing Disco and one poorly-performing Disco, to make the investment opportunity more attractive. He emphasized that the performance of Discos and pension issues are among Pakistan’s key challenges.

In response to a question about past mismanagement leading to the current crisis, Dr. Irfan acknowledged the issue, stating that the Power Division is working on multiple aspects, including reducing consumer tariffs—especially for industries—improving recovery, and reducing losses in line with NEPRA’s benchmarks.

Dr. Irfan further explained that the Power Division had submitted the Indicative Generation Capacity Expansion Plan (IGCEP) 2024 to NEPRA, but later withdrew it.

The current plan focuses on including only the least-cost projects, which total around 7,000 MW. Other qualified projects will be considered as candidates. He added that if any government—federal or provincial—wishes to include additional projects in the IGCEP, they will need to bear the extra costs through their respective PSDPs, rather than passing those costs onto consumers.

He assured the Committee that no official from the NTDC will be deprived of a job during restructuring process.

The Committee decided to invite Chairman NTDC Dr. Fiaz Ahmed Chaudhry for a detailed briefing on the 10-year generation and transmission plan at the next meeting.

The Committee also expressed interest in hearing from the Minister for Power regarding his claim of providing the cheapest electricity to consumers. However, the Minister was unable to attend the meeting due to the recent demise of a close relative.

Dr. Irfan informed the Committee that the government is working on various measures to reduce tariffs by June 30, 2025. He shared details of agreements with 27 Independent Power Producers (IPPs), noting that contracts with 5 IPPs have been terminated.

One IPP was transferred to government ownership, while the remaining four were shut down. Revised agreements for tariff reductions have also been initiated with 8 Baggasse Power Plants and 14 IPPs established under the Power Policies of 1994 and 2002. The early termination of 5 IPPs is expected to save around Rs. 411 billion. Similarly, the revised tariff terms with the Baggasse Power Projects are expected to yield savings of Rs. 238 billion.

Dr. Irfan also highlighted that hybrid model agreements have been signed with the 14 IPPs of the 1994 and 2002 Power Policies. Under these agreements, the IPPs are only allowed to recover the operational costs, resulting in an estimated savings of Rs. 802 billion over the remaining life of the projects. The overall savings, including recovery of excess payments and the waiver of late payment interest, is expected to total Rs. 922 billion.

The Committee also discussed CEO and management appointments in DISCOS, noting that there is no specific age limit. The Secretary confirmed that the boards had been informed of the end of their tenures and that a new board is being appointed.

Copyright Business Recorder, 2025