Sunday October 02, 2022

Centre asks provinces to take over power distribution companies

July 23, 2022

ISLAMABAD: Federal government has asked provinces to take charge of their respective power distribution companies (DISCOs) to reduce the financial burden on the center due to companies’ inefficiencies.

The centre wrote letters to all the provinces in this regard, asking them to start negotiations with the Ministry of Energy (Power Division) to own their respective DISCOs.

Officials of the Power Division on Friday apprised the Senate Standing Committee on Privatisation that met with Senator Shamim Afridi in the chair.

They informed that the Cabinet Committee on Privatisation (CCoP) in meeting last month directed the Power Division to write to all the provinces through the Ministry of Inter-Provincial Coordination (IPC) for negotiation in buying the relevant DISCOs. Subsequently, letters to that effect have been dispatched to the provinces.

It should be noted that the previous government had also made the offer to provinces, but they refused to take DISCOs under their control due to huge financial slippages on account of high subsidies, power theft, and distribution losses.

The committee discussed the Privatisation of Peshawar Electric Supply Company (PESCO) and Islamabad Electric Supply Company (IESCO).

Secretary Privatisation Dr Iram A Khan briefed the committee that, in view of the past lessons learned and latest global practices, a working group comprising officials from Ministry of Privatisation, NEPRA, Power Division, CPPA-G, and World Bank has proposed “Pakistan Model”.

He further said that the CCoP in May 2021 had approved the concession contracts for eight of the ten DISCOs, whereas the management contract was approved for Quetta Electric Supply Company (QESCO) and Tribal Electric Supply Company (TESCO).

However, there have been subsequent changes in policy and regulatory framework, which have a direct impact on DISCOs and the scope of concession and management contracts to be developed as part of this arrangement.

Federal Privatisation Minister Abid Hussain Bhayo said Sindh was already in the process of negotiation with Power Division for the acquisition of SEPCO and HESCO.

He expressed his confidence in the ability of the provinces to be successful in the power distribution business also, as Sindh was already in power generation and transmission.

The standing committee directed that regardless of participation or privatisation, as per the new electrical policy, the role of provincial, district, and law-enforcing agencies should be institutionalised in curbing line losses and poor collections.

The committee also deliberated upon the 488 acre land which was a property of Sindh Engineering Limited (SEL) but due to the complex litigation, has become disputed and hence became one of the major hurdles in the privatisation of SEL.

The committee in its last meeting had directed Commissioner Kasur to provide a detailed brief highlighting the moot points. A detailed presentation was given to the committee which was apprised that the subject matter was sub judice in the Lahore High Court (LHC).

The Standing Committee, after a detailed discussion, unanimously decided that the Chairman would direct the Ministry of Industries and Production through a letter to approach LHC for early resolution/disposal of the matter for determining the rightful owner of the property.

The matter relating to the Privatisation of Jinnah Convention Center (JCC) was moved to the next meeting. As per directions of the committee in the last meeting, secretary privatisation briefed the forum about the hiring and remuneration package of the consultants currently working in the commission.

He said that the appointments, extensions and remunerations were governed by Section-11, sub-section (2) of the Privatisation Commission (PC) Ordinance-2000.

Committee after consultation decided to formulate a sub-committee of three members, which would be briefed on the appointment procedure and other matters relating to these contractual appointments of consultants and advisors.