Govt plans to de-list all DISCOs from privatisation list

ISLAMABAD: The federal government has opted to remove all Distribution Companies (DISCOs) from both provincialisation and privatisation lists.

Sources said that ministry of Energy has forwarded the summary with regard to strengthening management in distribution companies (DISCOs) to federal cabinet for delisting all DISCOs from provincialisation and privatisation lists.

In addition, it also proposed offering DISCOs through concession model as the high ups of Energy ministry believe that concession model will being desired results for Pakistan.

It was agreed that two smaller DISCOs including GEPCO and HESCO may be earmarked, sequencing of other DISCOs may be done on the advice of transaction advisor.

The ministry of energy has also asked cabinet to approve appointment of transaction advisor as IFC has also expressed interest to provide transaction advisory services using its global experience with concessions.

Sources also said that government of Pakistan has also committed that it will engage a Transaction advisor for long term concession of DISCOs by end April 2024. Meanwhile World bank has also offered grant based technical assistance and risk guarantee instruments which give greater confidence to prospective private concessions and their lenders.

It is pertinent to note that DISCOs were placed on the active privatisation list but the process of privatisation could not be started. During the last government tenure, a committee on transfer of DISCOs to provinces was constituted. The committee submitted its report to the then PM who directed that the summary may be placed before the new cabinet.

Sources said that the minister for privatisation in September last year in SIFC meeting raised issue for adoption of ah appropriate course for transferring management of DISCOs to private sector. the meeting approved the recommendation of privatisation minister regarding private sector participation in management of DISCOs including management contract as well as outsourcing.

Meanwhile, the power division has also point of view that transferring of DISCOs to the provincial governments is unlikely to lead the required strategic shift furthermore provincial governments have also attached a number of conditions for taking over the ownership of the respective DISCOs which may not be nonconductive for improving operational performance.

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It was also discussed that sale of government assets have often come under legal and political pressure on account of valuation of assets. The argument of sale as throwaway prices has the potential to derail the whole process. In addition, legacy issue about the ownership of asset still exist and have been major hurdle for privitisation.