Senate slams Power Division over stalled privatisation of power plants

ISLAMABAD: The Power Division’s failure to resolve key issues related to government-owned power plants on the active privatisation list irked the Senate Standing Committee on Privatisation, well-informed sources told Business Recorder.

Chairman of the Committee, Senator Afnan Ullah Khan—who presided over the meeting—expressed dissatisfaction, stating that the Power Division had made little effort to move away from the single-buyer model.

“Gas supply is already limited, and its reservoirs are declining with each passing day. How, then, can the sale of power plants and their future agreements be preconditioned on gas supply?” he asked.

The Chairman also sought clarity on unresolved matters, especially regarding the Nandipur Power Plant. Joint Secretary Power Division, Ghulam Rasool, informed the Committee that the critical outstanding issue is the signing of a separate gas sales-purchase agreement between the plants and the gas supplier. This, he said, must be resolved before privatisation to present potential buyers with a stable and legally sound framework.

He explained that gas is currently supplied to the power plants on an “as-and-when-available” basis, a matter closely linked with the Petroleum Division. Because of the complexities involved, he added, eliminating the single-buyer model is not feasible for these plants at present.

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The Joint Secretary stressed that, under the Rules of Business, the Power Division’s role is limited to fulfilling the Conditions Precedent (CPs) recommended by the Privatisation Commission and implementing Cabinet decisions. He reiterated that gas supply is a complicated issue tied to Director General (Gas), and discussions are ongoing with the Petroleum Division, NEPRA, and ISMO. Several meetings chaired by the Petroleum Minister have already taken place, and proposals and counterproposals—including inputs from WAPDA—have been forwarded to the Prime Minister’s Office for a Cabinet-level policy decision.

He also detailed the Petroleum Division’s recommendations regarding gas supply arrangements for potential buyers of the power plants, including: (i) splitting the privatisation process into pre- and post-privatisation phases; (ii) maintaining the current “as-and-when-available” gas supply arrangement during the pre-privatisation phase, as both buyer and seller are government entities; (iii) requiring post-privatisation buyers to acquire gas under the same government import policies—though this raises questions about the rationale for privatisation if the model remains unchanged; and (iv) using privatisation proceeds to retire debts and liabilities of the plants immediately thereafter.

Briefing the Committee on the privatisation status of Nandipur and Guddu Power Plants—two major GENCOs on the active list—the Joint Secretary said that eight of nine prior actions for Nandipur have been completed, with one still pending. For Guddu, five of nine actions have been completed, while four remain unresolved.

He added that Guddu faces not only gas-supply challenges but also issues related to charges, loan settlements, and transfer of land ownership. Although Guddu currently receives gas from dedicated Kandh Kot fields, the risk of supply shortages persists due to declining reserves. The matter of transferring land ownership—currently held by WAPDA despite the plant’s management controlling the site—has been taken up with the Sindh government.

The Committee Chairman appreciated the efforts of both the Privatisation Division and the Power Division in accelerating work, but criticised the single-buyer model as unattractive to investors. He directed the concerned ministries to propose viable alternatives. The Secretary Privatisation informed the Committee that a comprehensive CTDC Plan, prepared in consultation with NEPRA, is ready for presentation whenever required.

The Secretary also briefed the Committee on the privatisation of three profitable DISCOs—IESCO, FESCO, and GEPCO—which are part of Batch-I of Phase-I. The Financial Advisor’s reports have been submitted and are currently under review by stakeholders, including the Power Division, NEPRA, CPPA, ISMO, DISCOs, and the Privatisation Commission.

The Committee recommended that representatives of NEPRA, Director General (Gas) from the Petroleum Division, and ISMO from the Power Division be invited to the next meeting for further deliberations on GENCO-related matters.

Copyright Business Recorder, 2025