The Imran Khan administration is reportedly exploring the option to run power sector State Owned Entities (SOEs) on Public Private Partnership (PPP) mechanism. Well informed sources told Business Recorder that this decision was taken by the Finance Minister, Asad Umar at a recent meeting of Economic Coordination Committee (ECC) of the Cabinet when chronic issues of circular debt came under discussion.
"Explore the option of running Discos on PPP basis," the sources quoted Finance Minister as directing the concerned Ministries. The newly constituted Cabinet Committee on Privatisation, headed by Finance Minister is scheduled to meet again this week to discuss privatisation agenda of the incumbent government.
Insiders claim that the power sector has inflicted over Rs 400 billion financial loss to the national exchequer due to "inaction" of Power Division during the last one year.
The former government had started the process of privatizing power sector companies but was derailed after trade unions locked down offices and refused to allow entry of Financial Advisors (FA) on the premises. Instances of highhandedness by staff were also reported in the media. In November 2015, former Prime Minister Nawaz Sharif constituted an inter-ministerial committee under the chairmanship of the then Minister for Water and Power, Khawaja Asif and comprising of Ministers for Finance, Overseas Pakistanis and Human Development, Labour and Chairman Privatisation Commission as members to negotiate with the power sector labour unions. The then Minister for Water and Power revealed during a subsequent meeting that, under the orders of the Prime Minister, the privatisation process for all the Discos and Gencos was stopped with immediate effect and the message had been conveyed to Secretary Privatisation by the Secretary Water and Power.
Later on the former government decided to privatise Discos through public offerings on the stock exchange. However, despite availing billions of dollars of foreign loans for energy sector, three more power sector companies ie Faisalabad Electric Supply Company (Fesco), Islamabad Electricity Supply Company (Iesco) and Multan Electricity Power Company (Mepco) reported financial losses of Rs 30 billion for fiscal year 2015-16, after which the three companies were de-listed from the public offering. The other six Discos were already in a loss.
Fesco reported Rs 13.31 billion losses in 2016-17 compared to Rs 5.22 billion profit the preceding year whereas Iesco, once the jewel of the distribution sector, reported Rs 7.75 billion losses in fiscal year 2015-16 as against Rs 2.74 billion profit in the previous year.
Mepco, which showed Rs 9.8-billion profit in fiscal year 2014-15, also became unprofitable in fiscal year 2015-16 and booked Rs 10.3 billion losses, according to a company official. He said that delay in determination and notifications of electricity tariffs and subsequent reimbursements to the customers were the reasons for the losses.
The other six companies ie Gujranwala Electric Supply Company (Gepco), Lahore Electric Supply Company, Hyderabad Electric Supply Company (Hesco), Sukkar Electric Supply Company (Hesco), Quetta Electric Supply Company (Qesco) and Peshawar Electric Supply Company (Pesco) were already facing financial turbulence.