Pesco takeover-no easy game

Different parties ruling in different provinces were always going to be interesting experiment; and PTI, the ruling party in KPK has thrown the first stone. Demanding control of the regional electricity distribution company Pesco was taken in good spirit by the Federal Government that raised no qualms. But things are easier said than done.
Principally, it is the right thing to do and experts are on the same page that power generation and distribution should be gradually devolved to the provinces. But gradually is the key word in the equation; and the way KPK government is asking for it, looks hastily planned and politically motivated, no matter how principally sound it, may be.
Pesco happens to be amongst the worst performing distribution companies in the country, with a Combined Efficiency Index (CEI) of 55 percent, significantly lower than the 83 percent average CEI of discos in Punjab. The transmission and distribution losses are the second highest in the country with 34.5 percent and a not-so-pleasing recovery rate of 84 percent.
Mildly put, it is a tough beast to deal with and Abbas Bilgrami, a renowned energy expert, believes the KPK government lacks capacity to manage Pesco in its current state. "KPK government does not have access to the level of funding required to reform an institution such as Pesco. They would struggle to finance for capital expenditure, seed capital and operational expenditure," Bilgrami said, adding that the provincial government will also struggle to find the right human resource to mange affairs.
Recall that PTIs energy policy talks of privatising discos and gencos, liberating them from government control. Privatising may still prove to be troublesome with the amount of losses on the books, and where recovery is termed as a nightmare. That said, the way to go about is keeping bulk of control with the province and let the private sector manage operations.
Bilgrami shares the fears out there that once Pesco is under the provincial government, they might go and ask for substantially low tariffs for the province based on hydro-based generation. "PTI needs to view the bigger picture of the federation. What if tomorrow Punjab sits over the wheat supply and leave the rest of the provinces hungry?" feared Bilgrami.
The counter argument is that the provinces have first right of consumption on natural resources after the 18th Amendment and Punjab has the option to convert its gencos to coal for the future. Moreover, pricing of assets might be a cumbersome exercise as it is the Federation which has invested and has serviced for the debt of the water reservoirs.
Instead of moving in haste a middle ground has to be found and the platform of the CCI should be used in this case. Politically motivated moves need to take a backseat and matters of such seriousness should be decided with realism. The debate should go on, but KPK needs to up its game on building the required technical capacity before jumping in uncharted waters.