ISLAMABAD, Nov 11: The government has decided to transfer its 100 per cent assets and ownership in Wapda to 12 corporate companies through a presidential ordinance.

Official sources told Dawn that the change of titles (commonly called “Transfer of Titles” in the official jargon) through the ordinance would enable the government to shift its ownership automatically to 12 corporate companies without going into the technical nitty-gritty.

The proposal has come from the World Bank that is co- financing a $1 billion power sector restructuring and corporatization plan to unbundle the multi-billion-rupee ‘Residual Wapda’ into 12 corporate companies and their subsequent privatisation, these sources said.

The steering committee on the restructuring of Wapda is expected to meet soon in the ministry of finance on the subject, Mirza Hamid Hassan, Secretary Water and Power confirmed to Dawn .

Official sources said that a draft ordinance was in the process of vetting and expected to be promulgated sometime next month following approval by the cabinet by the end of this month.

The World Bank suggested transfer of titles through an ordinance, instead of an executive order, as the mechanism was used successfully in some other countries, Wapda’s Member (finance), Manzoor Shaikh said.

The valuation of Wapda assets like real estate, machinery, investments, life of the plants and buildings on the basis of book value is already under way but this would not form basis for pricing at the time of privatisation, official sources said.

Wapda’s shares were transferred in the name of president of Pakistan/Pakistan Electric Power Company last year from Wapda itself following a number of reminders from the World Bank for onward transfer to Pakistan Electric Power Company (Pepco), the holding company responsible for corporatization of Wapda.

The unbundled corporate companies include eight distribution companies (Discos), three generation companies (Gencos) and a National Transmission and Dispatch Company (NTDC) and have been registered independently under the Companies Ordinance, 1984.

These sources said that transfer pricing and financial modelling exercise has been completed by Wapda and discussed with the WB but the two issues were required to be finalized and approved by the National Electric Power Regulatory Authority (Nepra).

Another reform measure that was still behind schedule related to completion of distribution and generation licences to the corporate companies that has now just started.

These sources said that once Nepra completed the licensing process the final mechanism for transfer pricing would emerge and then approved by the Nepra. The financial modelling of corporate companies is required to be completed by December 31, 2001, they said.

These sources said that the question relating to exemption of Wapda companies from provincial taxes had been agreed to with the provincial authorities against some adjustments in tariffs but a notification to that effect had not been issued due to some legal complications.

On federal tax exemptions, said the sources, the finance minister has informed Wapda in no uncertain terms that the days of tax exemptions were gone and hence the corporate companies must reduce their losses to cover the fiscal gap.

The Wapda has, however, told the government that if income tax exemptions were not granted, the majority of the Discos and Gencos would be filing no returns because they did not earn profits at all. Consequently, the interim order by the chief executive relating to withholding tax has also been put on hold, these sources said.

As things stand now, notification on provincial tax exemptions, federal tax exemptions, particularly the income tax and the withholding tax, transfer of Wapda employees to Discos and Gencos and transfer of assets, were some of the requirements that are still either in the process or behind the schedule agreed with the World Bank, the Wapda sources confirmed.