ISLAMABAD: The caretaker government has decided to appoint Chief Executive Officers (CEOs) of power Distribution Companies (Discos) from Federal Service on need basis, and change Boards of all Discos.
Well-informed sources told Business Recorder that Power Division is seeking Federal Government’s approval, in principle, for appointment of CEOs of Discos from Federal Service which includes Pakistan Administrative Service (PAS), Income Tax Group, Audit and Accounts and Police Group on deputation basis as quality of some of the CEOs is very poor. For this purpose, Power Division is about to send a summary to the federal government for its final approval.
The sources said process to change Boards of all the Discos has also been initiated as most of the existing Board members are politically influenced. For this purpose, Power Division will seek applications from eligible candidates through advertisement in the newspapers.
“First of all Power Division will scrutinize the CVs of intending candidates and then call them for interview,” the sources added.
Responding to a question regarding recovery and anti-theft campaign, the sources said, government has decided to send cases of running defaulters of Discos to the National Accountability Bureau (NAB) for further action, in addition to blocking National Identity Cards (NICs) of defaulters and those involved in electricity theft. Discos have recovered Rs 12 billion from defaulters and electricity thieves.
Replying to another question, sources said, there is strong consideration at the federal government level to give management control of Discos to the private sector as in current circumstances no serious investor will come forward.
“If the federal government cannot run Discos without financial bleeding then how can a provincial government turn them into a profitable entity. Either way – Federal Government or Provincial Government –the hit will be on the national exchanger,” the sources added.
The government, sources said, has re-engaged International Finance Corporation (IFC) of World Bank to find out a solution for poorly performing Discos but the IFC does not have power sector experts for such transactions.
The story of privatization of Discos is 30 years’ old which started in 1993 when the CCI approved a Strategic Plan for corporatization of WAPDA. The first tangible step in this direction was the enactment of the NEPRA Act in 1997, which was followed by incorporation of Discos, Gencos, and NIDC. However, due to different reasons, corporatisation could not result in privatisation of Discos.
The process of privatization started again recently when the CCoP in its meeting held on January 04, 2021 directed the Ministry of Privatisation to expedite privatisation, and Power Division to complete the requisite actions prior to privatization of Discos.
Power Division provided all the required information to M/o Privatization with the following objectives: (i) reduce ATC losses of each DISCO to the level allowed by NEPRA;(ii) improve quality of service delivery and consumer satisfaction; (iii) raising monetary proceeds was not a consideration; and (iv) Privatisation Commission to complete privatisation as soon as possible under rules/policy/law.
Instead of proposing a full-fledged privatisation, a Working Group in the Ministry of Privatisation with appropriate representation proposed Management Contract Model for QESCO and TESCO and the Concession Model for the rest of Discos. To proceed further, an Inter-Ministerial Committee including Minister for Power, was constituted on July 1, 2021 to engage with the labor unions on matters related to management contracts/concessions of DISCOs to allay their fears.
The meeting of the committee was held in Power Division on July 14, 2021. After detailed discussion, it was decided by the Committee that it was premature to engage with the labour unions. The appointment of Transactional Advisor for privatization of DISCOs, during the said period, however, remained under process in Privatization Division.
As a new development, the CCoP on June 24, 2022 directed Power Division to seek consent from respective Provinces for buying Discos; resultantly privatisation of Discos was stalled by Ministry of Privatisation.
To expedite the process of Provincialisation, the Prime Minister constituted a Committee on March 17, 2023, under the chairmanship of the Minister for Defence for the purpose.
The Committee deliberated on various points raised by the provinces and Ministries for Law and Justice, Privatisation Commission and CCI during its five meetings. Government of Sindh (GoS) indicated its consent for transfer of HESCO and SEPCO from Federal Government to GoS. Government of Baluchistan (GoB) is hiring Transaction Advisor while the Government of KPK wants transfer of Discos with generation and Government of Punjab (GoP) is still considering the matter.
