Government approves partial privatisation of DISCOs

ISLAMABAD: The Cabinet Committee on Privatization (CCoP) on Friday approved partial privatisation of the state-owned power supply companies by offering management control but has shelved total disinvestment plans in loss-making DISCOs, officials said.

Shaukat Tarin, minister for finance and revenue chaired the CCoP meeting.

Officials said concessions or management contracts are the most optimal options for the private sector participation in management of DISCOs.

A government statement said the CCoP approved a summary, based on a recommendation of the PC board, regarding provision of funds for hiring of a financial advisory consortium (FAC) of international repute having pertinent experience in the; technical, financial, legal and regulatory fields, to conduct the transaction of DISCOs and for carrying out an effective communication strategy.

The FAC will carry out a quick analysis of each DISCO, keeping in view the specific state of affair including; customer base, revenue steam, technical and operational assert base, financial health, investment requirement and legal and regulatory aspects.

"On the basis of due diligence review, the FAC will recommend a specific transaction structure for each DISCO separately, the official said.

The CCoP also delayed divestment of the government's stakes in oil and gas giants, Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company Limited (OGDCL).

"The forum approved the proposal indicating that divestment of shares is not feasible at this stage and should be considered only once issues like circular debt are resolved, even partially; thereafter, strategic sale to a reputable Exploration & Development (E&P) company would be a preferred option," it added.

The official said the ministry of energy was of the view that both PPL and OGDCL are profitable companies and the current depressed share prices do not reflect the real worth of these firms.

The government planned to undertake disinvestment of 10 percent it stakes in PPL and 7 percent in OGDCL through public offering to the foreign and domestic institutional investors, high net worth individual and common investors through Pakistan Stock Exchange.

Minister for Planning, Development and Special Initiatives Asad Umar, Minister for Energy Muhammad Hammad Azhar, Minister for Industries and Production Makhdum Khusro Bakhtyar, Minister for Privatization Muhammad Mian Soomro, Adviser to the PM on Institutional Reforms and Austerity Dr. Ishrat Hussain, Adviser to the PM on Commerce Abdul Razak Dawood, SAPM on Finance and Revenue Dr. Waqar Masood, SAPM on Power and Petroleum Tabish Gauhar, Federal Secretaries and other senior officers participated in the meeting.