ISLAMABAD: Power Division has handed over the entire documents of power Distribution Companies (Discos) to the Privatisation Commission (PC) meant to expedite sell-off process of those companies, well-informed sources told Business Recorder.
The Discos employees are already protesting against the proposed privatisation of companies, fearing that they will lose jobs.
On January 5, 2021, Privatisation Commission wrote a letter to Power Division in which the decision of the Cabinet Committee on Privatisation (CCoP) of January 4, 2021 was conveyed, wherein it was decided that Ministry of Privatisation will expedite privatisation/management contracts relating to Discos already included in the first phase and submit a viable implementation plan in consultation with Power Division to the CCoP for consideration. Power Division was also directed to expedite completion of requisite actions prior to the privatisation of the companies.
In this connection, as a first step. Power Division was asked to provide the preliminary information about the Discos as per format, which was
approved by the CCoP in its meeting held on November 16, 2020 and duly ratified by Federal Cabinet on December 4, 2020.
In addition, standard questionnaire regarding entities to be privatized, the following information and clarifications were also sought for preparing implementation plan.
1) Information-;(i) precise brief comprising financial, technical and commercial key highlights of Discos;(ii) copies of the latest four years audited financial statements i.e. balance sheet, profit & loss account, cash flow statement and statement of equity including ancillary notes;(iii) copies of the key agreements;(iv) copies of the tariff determinations by NEPRA, highlighting regulatory matters and ancillary issues;(v) identification of key Legal issues i.e. details of the matters under litigations and court cases which may affect the privatisation process.
2) Clarification – : (i) the existing licences of different Discos are valid till 2022. A clarity was also sought on future area service jurisdiction beyond the existing licence validity;(ii) as per the NEPRA Amended Act, 2018 the retail and wire business in the Distribution Companies has to be segregated. Clarification was sought whether both components/businesses are to be considered for privatisation or otherwise;(iii) clarification was also sought whether government intends to transfer the existing liabilities and receivables of Discos to the parent company or otherwise;(iv) NEPRA has recently approved CTBCM Model. Clarification/ comments were sought how this aspect will impact legal & tariff aspects of Discos ;(v) on the basis of ground realities sequence for privatisation of the Discos may be specified/ suggested;(vi) confirmation was sought if there is any charge created on the assets of Discos to be privatized. If yes, by what time this charge will be removed;(vii) Power Division in consultation with the regulator will also suggest suitable mode of privatisation / management contracts for the Discos ;(viii) clarifications were sought if the buyer will be given monopoly rights; if uniform tariffs would be maintained in country and if the government keeps giving subsidy for poor ;(ix) what mode of consumer tariff will be adopted (multi-year vs annual; performance vs cost plus) and if multi-year tariff for a minimum period of 5 years will be issued or no;(x) what support the buyer will have from law enforcement? and;(xi) what will be the buyer’s rights regarding personnel terminations?
