The Pakistan Tahreek-e-Insaf is all set to start privatizing power Distribution Companies (Discos) and in this regard, Cabinet Committee on Privatisation (CCoP) has directed Task Force on Energy Reforms to present a viable plan for sell-off of one or two Discos, well informed sources in Privatisation Commission told Business Recorder.
This decision was taken by the CCoP in its meeting held on June 17, 2019 with Prime Minister''s Advisor on Finance, Dr Abdul Hafeez Shaikh in the chair. Giving the background, the sources said, Task Force on Energy Reforms was directed by the CCoP on February 21, 2019 to submit a report on privatisation of Discos. The Task Force headed by Nadeem Babar, who has now been promoted as Prime Minister Special Assistant on Petroleum, identified certain problems/challenges of Discos and Gencos and proposed that the first important principle is balancing of cost and revenue equation i.e. cost (generation + transmission + distribution) = revenue received (recovery from end consumers + funded subsidy). The Task Force maintained that there is a need to improve collection and reduce cost of generation and subsidy needs to be limited to the lifeline consumers which should be budgeted and funded. It further argued that privatisation is the final solution for Discos but before privatisation the large Discos need to be broken into smaller units, professionals injected at various levels and theft eliminated with 100 per cent recovery ensured by cutting supply to the consumers who do not pay within a short time and introducing automated metering infrastructure. The Task Force suggested that subsidy, whatsoever, should be funded and paid in time.
The Task Force proposed the following future strategy for Discos: (i) ongoing theft policy and recovery program to continue till at least June 2020. Areas that have high losses continue to see high loadshedding by design; (ii) removal/elimination of transmission constraints by December, 2019; (iii) continuation of automated metering infrastructure program in phased manner; (iv) commitment of GoP to end unfunded subsidy; (v) elimination of political intervention through independence of BoDs; (vi) breakup of four larger Discos (Lesco, Mepco, Genco and Fesco) into better performing small units after detailed technical analysis; (vii) any Discos where AMI metering program is deployed, independent board is in place and where the size is manageable and loss ratios in not too high, be considered for privatisation; (viii) to continue implementation of ABC cable in high loss Discos and to split the areas on the basis of losses and theft for administrative purpose; (ix) the first Discos will be ready for privatisation in three years after completion of reform process; (x) moving of Discos which are not to be privatised from the line Ministry to Sarmaya-e-Pakistan for restructuring; and (xi) Discos which completed reform process but have not been put on privatisation path, should be placed in Sarmaya-e-Pakistan.
During ensuing discussion, the CCoP observed that reforms for Discos as proposed by the Task Force will take considerable time in materializing therefore shelving of privatisation program of Discos for three years is not viable. The CCoP directed the Task Force to present a viable plan for privatisation of one or two Discos in its next meeting. The CCoP also directed Power Division to update the forum about closure/ decommissioning of the Gencos which have outlived their recommended life, in its next meeting.
After detailed deliberations, the CCoP agreed, in principle, to the future strategy/ reforms regarding privatisation of Discos as proposed by the Task Force on Energy Reforms. The CCoP, however, observed that privatisation of Discos could not be shelved/ put on hold for three years. The CCoP directed the Task Force on Energy Reforms to present a viable plan of one or two Discos in its next meeting.
The CCoP further directed the Power Division to update the forum about closure/ decommissioning of the Gencos, which had outlived their recommended life.
The PML-N government had started privatisation process of power sector companies i.e. Discos and Gencos but it was shelved by the then Prime Minister, Nawaz Sharif after employees of the companies began agitation against the privatisation plan.
Comments
Comments are closed.