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Print Print 2024-03-24

Private sector’s participation in Discos: IFC in talks with Power Division

  • CCoP directs the Privatisation Commission to lead the process of offering the Discos through long-term concession with support from the Power Division
Published March 24, 2024

ISLAMABAD: The International Finance Corporation (IFC), an arm of the World Bank, is engaged in discussions with the Power Division to help promote private sector participation in power Distribution Companies (Discos), well-informed sources told Business Recorder.

The IFC’s engagement with the Power Division was reflected in a letter written by the Country Manager Zeeshan Sheikh to the newly appointed Minister for Power, Sardar Awais Leghari. It is noteworthy that the Cabinet Committee on Privatisation (CCoP) of the caretaker government had taken a policy decision that IFC will not be involved in Discos’ planned long-term concessional arrangements with the private sector.

The proposal to hire the services of IFC as the Transaction Advisor on long-term concession agreements of Discos was placed before the Careful Cabinet Committee on Privatisation (CCoP) but did not sail through due to differences of opinion among the stakeholders.

Privatisation of Discos, various IPPs projects under study

The sources said the CCoP directed Privatisation Commission to hire a Financial Adviser as per provisions of Privatisation Commission Ordinance 2000 and the rules framed there under.

The sources said, CCoP approved adoption of long-term concession model for private sector participation in the two Discos namely, Gujranwala Electric Power Company (GEPCO) and Hyderabad Electric Supply Company (HESCO) on the principle of one profit making and one loss making entity to be offered jointly to the investors.

According to sources, it was also decided that the previous decision of the Federal Cabinet to provincialize the Discos was annulled and remaining Discos were to remain on the privatisation list. The CCoP directed Privatisation Commission to lead the process of offering the Discos through long- term concession with support from Power Division as per provisions of Section 25 of the Privatisation Commission Ordinance, 2000.

The IFC, in its letter stated that Pakistan is a key member country for IFC and it looks forward to supporting its journey towards a sustainable and inclusive development model.

“With wide-ranging advisory and investment programs and expected IFC investments in the range of $ I.5-2 billion per annum in Pakistan, we are keen to work together with the government to mobilize domestic and international private capital in key sectors of shared priorities including energy and sustainable infrastructure,” wrote Sheikh.

On power sector in particular, he claimed that IFC in Pakistan over the years has been actively investing in renewables, including wind and hydro power projects.

“We are currently in discussions with your ministry (Power Division) to help promote much needed private sector participation in Discos and transmission line projects - key areas of focus for the World Bank Group to address the power sector’s sustainability challenges, “ he continued.

The caretaker government, which received appreciation from Prime Minister Shahbaz Sharif for its dedicated work during its stay in office did not approve constitution of Ministerial Steering Committee, as proposed in the summary.

The caretaker government also approved constitution of Technical Working Group, with composition to be determined by Minister for Privatisation, in consultation with Minister for Energy, tasked to assist Privatisation Commission in expediting the process and look after the technical requirement during the transaction.

The Action Plan as proposed in the summary would be considered separately and will be approved after due diligences by the Privatisation Commission, the sources continued.

Copyright Business Recorder, 2024

Comments

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M.Aleem Khan hoti. Mar 26, 2024 12:25am
The privitisation of Discos will further create problems for the end consumers .The govt needsto improve the distribution system and curb the menace of theft and pilfierages of electricity.
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