ISLAMABAD: The Cabinet Committee on Privatisation (CCoP), which is scheduled to meet on Wednesday (today), will consider a proposal of Privatisation Commission (PC) to give five Discos on a ten-year Concession Agreement (CAs) and five Discos on the basis of Management Contracts.
To be presided over by Finance for Minister Shaukat Tarin, Privatisation Commission will brief the meeting on the history of Discos’ performance and highlight three different scenarios which were presented for CCoEs consideration and which are as follows: (i) business as usual; (ii) private management contracts; and (iii) provincializing the Discos under Public Private Partnership (PPP) model.
According to the plan, five Punjab-based financially sound Discos - Islamabad Electric Supply Company (Iesco), Gujranwala Electric Power Company (Gepco), Lahore Electric Supply Company (Lesco), Faisalabad Electric Supply Company (Fesco) and Multan Electric Power Company (Mepco) - will be given to the private sector under a ten-year Concession Agreement (CAs).
Under the concession agreement, the party/ parties that acquire the company for ten years will have to invest from own resources to improve the distribution and transmission infrastructure.
"The new investor will invest in transformers, ABC bundle cable and other related equipments aimed at improving the performance of the company and reduce losses. The investor will get a return on its investment," the sources continued.
The five loss-making and financially weak Discos like Hyderabad Electric Supply Company (Hesco), Sukkar Electric Power Company (Sepco), Quetta Electric Supply Company (Qesco), Peshawar Electric Supply Company (Pesco) and Tribal Electric Supply Company (Tesco) will be given to the investors on the basis of management contracts for five years.
The sources said, during a recent meeting of CCoE, Minister for Maritime Affairs, Ali Zaidi did not support scenario-III i.e. provincializing Discos under PPP mode. According to him, it is not workable as the provincial governments will not be interested to take on liabilities. Moreover, it was the task of the federal government to implement the writ of the state and he further contended that if the provincial governments do not cooperate with the private management, the problem will not be solved.
Adviser to the PM on Commerce and Investment, Abdul Razak Dawood, supported Ali Zaidi’s views with the remarks that the Government of Sindh would not pick up liabilities of the two Discos; and therefore, the Provincial Governments may come back to the Federal Government for financial support to meet the liabilities.
Asad Umar, Chairman of CCoE, also supported the idea that provinces should not be stakeholders in the Privatisation of Discos.
The federal government will invest in the five financially weak companies to improve their infrastructure, reduce losses, and improve recovery. The management investor will get a share in savings to be achieved through reduction in losses and improvement in recovery.
Copyright Business Recorder, 2021