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June 18, 2019

Govt to pull plug on loss-making Gencos

Business

June 18, 2019

ISLAMABAD: Finance Adviser Hafeez Shaikh on Monday directed the ministry of energy to close state-owned power generation companies that are running into losses.

The decision was taken during a meeting of the Cabinet Committee on Privatisation (CCoP), presided over by Adviser to the Prime Minister on Finance, Revenue and Economic Affairs Shaikh.

The CCoP directed the ministry of energy to submit proposals aimed at accelerating closure of power generation companies that have outlived their recommended life and are running into losses, an official statement said.

Presenting the report of the task force on energy reform, the ministry of energy briefed the committee about the challenges being faced by the power distribution companies (discos). Various measures recommended by the task force for improving the performance of energy sector with a focus on reduction of losses and enhancing the efficiency of discos were discussed during the meeting.

Power distribution companies are facing serious challenges of nonpayment. According to a government’s estimate, receivables of all power distribution companies are projected to reach Rs601 billion this fiscal year and Rs669 billion during the next fiscal year.

Privatisation of Pakistan Steel Mills (PSM) was also discussed during the meeting. The committee directed ministry of industries and production and privatisation commission to submit their proposals in the next CCoP.

The government is weighing an option to rejuvenate the state-owned PSM under the public-private partnership mode in phases that was estimated to cost around $800 million. The steel mills would be revived to achieve its built-in capacity in the first phase within one and a half-year, while the production capacity would be jacked up to three million tons in the second phase.

The PSM shut down its furnaces in 2015 and it consumed almost Rs200 billion of state funds on various heads till last year from 2008 when it used to be a profitable organisation. The government has to pump an estimated Rs400 million every year to pay salaries of the PSM’s employees.

The privatisation committee further recommended to presenting the issue of delisting of House Building Finance Corporation Ltd from the privatisation list before the next meeting. The government chalked out plan to privatise 49 state-owned enterprises in the next five years.

Minister for Privatisation Mian Soomro, Adviser on Commerce, Textile, Industry and Production and Investment Razak Dawood, various secretaries and senior officials of the government attended the meeting.

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