Islamabad:
Prime Minister Shehbaz Sharif on Thursday set up a committee to transfer 10 electricity distribution companies (DISCOs) to provinces, which was not in line with last month’s decision by the Special Investment Facilitation Council (SIFC) that wanted to hand over these companies to private sector. sector.
The Chief Minister has given the directive to set up a review committee to look into the proposal to hand over DISCOs to provinces, according to a statement issued by the chief minister’s office after a meeting. Former Petroleum Minister Dr Musadiq Malik will chair the committee.
However, the SIFC in its last meeting on February 2 had decided that “privatization of DISCOs shall be deleted from the active list of privatizations and the framework for private sector participation shall be finalized and approved by the relevant forums”.
Days after the SIFC’s decision, the Cabinet Committee on Privatization (CCOP) also decided to initially give two DISCOs under long-term lease concessions of 20 to 25 years to the private sector.
It is the fourth time that a government has decided to hand over loss-making DISCOs to provinces despite previous moves that wasted time and contributed to the industry’s losses.
“We are walking on the same road again and every time privatization comes around, such proposals are made, which end up wasting time,” said Fawad Hasan Fawad, former caretaker minister for privatisation.
During earlier attempts to transfer ownership of power companies to provinces, only Sindh had shown willingness and that too on the condition that losses and liabilities of the sector would remain the responsibility of the federal government.
Shifting DISCOs to provinces will not solve the problem until it is decided to end the uniform tariff policy where an honest consumer of Islamabad pays for theft in Sukkur and Karachi.
The former minister said the delay in privatization of DISCOs had already caused a loss of Rs 2.7 trillion in the form of circular debt in the power sector.
“The power sector has the capacity not only to bring down the government but also the state of Pakistan and today it is on the verge of bringing down the state,” said Fawad, who is a strong supporter of outright privatisation.
He said the decision to hand over the management of two DISCOs to the private sector was taken after extensive discussions at a CCOP meeting, though his personal view was absolute privatisation.
There was less focus on the privatization of the power sector, which caused losses of Rs 376 billion out of the combined losses of Rs 730 billion suffered by all state-owned companies in 2022.
Last month, CCOP decided to give Gujranwala Electric Power Company (Gepco) and Hyderabad Electric Supply Company (Hesco) a 20 to 25-year lease. The State-Owned Enterprises (SOE) annual report showed that Gepco made a loss of Rs20.6 billion while Hesco’s losses amounted to Rs54.4 billion in the 2022 financial year.
When contacted, the privatization secretary said the privatization program was a prerogative of the federal government under Section 5 of the Privatization Commission Ordinance 2000.
He said adding or amending the privatization program “is the responsibility of the federal government.”
The privatization secretary said the privatization plan for the next five years will be drawn up by the CCOP and the federal cabinet, where all options for SOEs will be explored before being presented to the federal cabinet.
Fawad said that in case the provinces took charge of the power sector, the DISCOs would eventually become the worst local monopolies.
The Prime Minister’s Office said that Shehbaz Sharif during the meeting made it clear that the responsibility of the privatization process rests fully with the Privatization Commission and the privatization ministry. He also directed to remove all bottlenecks in the process.
The Prime Minister emphasized the need to ensure transparency in the privatization process and the adoption of effective international monitoring standards.
Shehbaz Sharif emphasized the need to speed up the process of privatization of those state-owned enterprises which were causing constant strain on the national exchequer and called for stabilizing the economy and providing maximum relief to the common man.
“The hurdles in the way of privatization must be removed at the earliest so that the country gets rid of losses of billions of rupees and improves the economic situation,” he said while presiding over the meeting.
The Prime Minister called on the officials to take immediate steps to strengthen the capacity of the departments connected with the privatization process.
While reviewing the complete list and progress report for all the institutions involved in the privatization process, the Prime Minister directed the officials concerned to submit the details of the actions and targets with a clear timeline.
He told the Privatization Commission and the ministry to present the pending privatization related issues to the cabinet soon after its formation for timely decisions as there is no room for further delay.
The meeting reviewed the latest status regarding privatization of Pakistan International Airlines (PIA), House Building Finance Company, First Woman Bank, Roosevelt Hotel, Heavy Electrical Complex, Power Plants and DISCOs, Pakistan Steel Mills and other loss making institutions. He discussed the progress made so far and the obstacles he faces in this regard.
The Prime Minister directed to make the legal team effective and asked the Ministry of Law to suggest appropriate measures.
Published in The Express Tribune, March 8u2024.
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