ISLAMABAD: The Cabinet Committee on Privatisation (CCOP) has approved the sale of six of the highest loss-making power distribution companies and four power generation companies, which collectively incur annual losses exceeding Rs200 billion. This decision, aimed at reducing the financial strain on the power sector, indicates that consumers will continue to face high electricity bills to cover these losses.
The CCOP, led by Deputy Prime Minister and Foreign Minister Senator Mohammad Ishaq Dar, reiterated its commitment to privatizing 24 state-owned enterprises (SOEs) over the next five years. Despite this decision, the consumers will bear the burden of these companies’ losses through higher electricity bills until the privatization process is completed.
The committee deferred the inclusion of 16 additional SOEs in the active privatization list but approved a Rs7.7 billion budget for hiring financial advisors for the privatization process. Two government-owned LNG-fired power plants were removed from the privatization program.
In the second and third phases of the privatization plan, the government aims to sell off the higher loss-making entities, including Lahore Electric Supply Company (LESCO), Multan Electric Power Company (MEPCO), Hazara Electric Company (HAZECO), Hyderabad Electric Supply Company (HESCO), Peshawar Electric Supply Company (PESCO), and Sukkur Electric Power Company (SEPCO). In 2023, these companies incurred combined losses of Rs181 billion.
The first phase will focus on privatizing Islamabad Electric Supply Company (IESCO), Faisalabad Electric Supply Company (FESCO), and Gujranwala Electric Power Company (GEPCO). These companies, despite being relatively efficient, also sustained significant losses, with FESCO incurring Rs15 billion in losses and IESCO Rs666 million, while GEPCO managed to make Rs23 billion in profits in 2023.
The CCOP did not make a decision on transferring shares of the Oil and Gas Development Company (OGDC) to the Petroleum Division or the Sovereign Wealth Fund. It also delisted several entities, including the National Power Parks Management Company Limited, Republic Motors, and Jinnah Convention Centre from the privatization program.
Additionally, the committee approved policy guidelines emphasizing the reduction of the federal footprint in commercial spaces and prioritizing the privatization of profitable SOEs, not just the loss-making ones. The Rs8.2 billion budget approved for the Privatisation Commission includes Rs7.7 billion for hiring financial advisors, covering payments for advisors involved in the privatization of PIA, the Roosevelt Hotel, and several power distribution companies.
The CCOP’s decision underscores the urgency of addressing inefficiencies in the power sector while highlighting the ongoing financial challenges faced by consumers.
Story by Shahbaz Rana
