ISLAMABAD: The World Bank has proposed transferring ownership of 10 power distribution companies (DISCOs) to the president of Pakistan as part of a privatisation strategy aimed at mitigating the sector’s burden on the national exchequer.
The recommendation is among nine key prior actions outlined by the World Bank to ensure successful privatisation. These include cleaning up DISCOs’ balance sheets, notifying tariff and subsidy guidelines, and developing a new electricity policy to reduce technical and commercial losses.
During a Senate Standing Committee on Privatisation briefing, chaired by Senator Tallal Chaudhry, it was revealed that only two of the nine conditions have been met, with the remaining expected to be fulfilled by January next year.
The privatisation process, deemed more complex than that of Pakistan International Airlines (PIA), involves a phased approach. In the first phase, profitable entities such as Islamabad Electric Supply Company, Faisalabad Electric Supply Company, and Gujranwala Electric Power Company will be sold outright. In contrast, high-loss DISCOs like Hyderabad and Peshawar will be offered under long-term concession agreements in the second phase.
Despite privatisation, a uniform national tariff will remain in place, causing regions with lower losses to subsidize those with higher losses, such as Sindh and Balochistan. The World Bank also emphasized the need to address off-balance sheet liabilities, clarify subsidy frameworks, and establish clear roles and responsibilities under a new electricity policy.
The government plans to hire financial advisers for the initial three DISCOs by November 2024, with technical and financial evaluations underway. Privatisation is expected to attract efficiency improvements, but subsidies for consumers of privatised entities will persist, indicating continued fiscal challenges.
Story by
Shahbaz Rana
