LAHORE: The Cabinet Committee on Privatization (CCoP) is in the process of approving the appointment of a financial advisor (FA) to take the process of privatization of power distribution companies (DISCOs) forward.
According to well-placed sources, the CCoP is set to accord approval during the ongoing month and the Board would start the process for the hiring of an FA with international repute.
When contacted, spokesperson of the Board Samreen Zehra confirmed the development and termed it a big leap towards the privatization of DISCOs. She said the FA and his team, once appointed, would chalk out a comprehensive plan for the Board as how to initiate the privatization process.
It may be noted that the Privatization Commission had constituted a working group on the subject back in February to finalize recommendations of the Board of the Commission. While talking to Business Recorder, spokesperson of the Commission had termed it a milestone towards privatization of DISCOs.
Meanwhile, sources from the Power Division have pointed out that the Division was planning to start the privatization of DISCOs by the end of the next calendar year. They said the terms of reference (TORs) for handing over DISCOS’ management to private sector operators have been finalized and a more equitable financial and risk sharing arrangement with the provinces might start soon in accordance with the spirit of the 18th Amendment and the upcoming NFC Award.
Accordingly, they said, centralized monthly monitoring of various NTDC & DISCOs capital expenditure projects is underway to remove transmission and distribution bottlenecks in the system under Rs118b PSDP and funds allocated in the budget for the fiscal year 2021-22.
It may be noted that the recent supply-side challenges have again exposed the “fragility” of the energy ecosystem during peak times, notwithstanding the “excess capacity” syndrome. Therefore, said the sources, the Power Division is fast-tracking privatization of the public sector power plants, setting up a centralized power-cum-petroleum “Planning Cell” for more accurate demand-supply forecasts based on a data-driven/econometric modeling exercise; and commissioning of an independent audit of those thermal IPPs that were not available in the need of the hour and yet kept charging take-or-pay capacity payments throughout the year.
The sources said the government was also considering converting the already commissioned and under-construction imported coal-based IPPs to local coal from the existing Thar Blocks 1 & 2 due to the escalating prices of imported coal, hitting $146 per ton (80% increase this year).
Copyright Business Recorder, 2021