The Senate Standing Committee on Finance has asked the federal government to give preference to the provinces in the privatisation of power distribution companies (DISCOs) to avert Karachi-like situation. The proposal was floated by the Chairman of the Senate Standing Committee on Finance Saleem Mandviwalla here Wednesday during the committee meeting to take briefing from the Privatisation Commission on present, past as well as future privatisation and was endorsed by members of the committee.
"Privatisation of public electricity distribution companies and other utilities must be first offered to the provinces" the committee members stated adding that "if provincial governments are not interested" then federal government must ensure that provinces had some stake in planned privatisation of DISCOs to avert Karachi like situation and issue like K-Electric. Mandviwalla also said that the Chief Minister Sindh has already written a letter to the federal government with respect to handing over Sukkur Electric Power Company to the province. A member of the committee maintained K-Electric as per agreement was getting electricity at a very cheap rate from the federal government and was selling it at much higher rate to the people of Karachi.
Chairman Privatisation Commission Muhammad Zubair, who agreed to the committee members' opinion, stated "your (committee's members) point is valid, let us consider it." However, he maintained that federal government has already made an offer to provinces regarding sale of distribution companies to them during the Council of Common Interests (CCI) meeting after Pakistan Tehreek-e-Insaf (PTI) leadership publicly demanded that PESCO must be handed over to the province. He maintained that provinces have shown reluctance in taking Discos because of certain conditions attached to it, such as clearance of circular debt and payment of subsidies. Chairman Privatisation Commission also revealed to the committee that privatisation transaction of Heavy Mechanical Complex has been dropped and notice has been issued to the company after its payment cheque bounced. He further added that earnest money of the company was forfeited. Zubair informed the committee that the company which qualified in the bidding process of Heavy Electrical Complex (HEC) was required to sign agreement within 45 days and make payment. However, in May the company requested extension in payment time and now the cheque given by it has also bounced. Zubair did not agree to the members that there must have been some lapses in due diligence and stated that best judgement was exercised by the PC in the case of HEC but the company proved them wrong.
Chairman Privatisation Commission said the government would generate around $4 to 5 billion from the transactions of remaining companies in the list of privatisation. He added that privatisation transaction of National Power Construction Company would be completed in the last week of next month and Rs 172 billion has been generated from privatisation in the last 12 months. He acknowledged that as per CCI 1997 decision and Privatisation Ordinance 2000, the government was required to use 90 percent privatisation proceeds for debt retirement and 10 per cent for poverty alleviation. He added that Pakistan Steel Mills (PSM), Pakistan International Airlines (PIA), HESCO, SEPCO and first women banks are major burden on the economy. He said that banks in public sector were being influenced by high ups first for taking loans and then to write them off, but after privatisation banks are no longer in government control. He, however, acknowledged that banks media persons and politically exposed people are on negative list of the banks. The committee decided to take up the issue with State Bank of Pakistan (SBP) today (Thursday).
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