ISLAMABAD: Without disclosing the total outstanding electricity bills against the public and private sector, caretaker Minister for Power Muhammad Ali has said the electricity costs will be reduced through lengthening the repayment tenor of debt and improving energy mix to renewables and Thar coal.

Speaking to reporters on Monday, the minister said the government was making up mind to give out all the 10 distribution companies of ex-Wapda to the private sector on Long-Term Concession Agreement (LTCA) for 20-25 years, but a final decision would be taken by the federal cabinet as to which of three options to follow, including giving Discos to the respective provinces and their outright privatisation.

Responding to a question, Mr Ali, who also holds the portfolio of petroleum division, said the people would face gas loadshedding in coming winters, although maximum efforts would be made to ensure that shortage should not exceed that of the last year.

Also, gas prices would be increased very soon, but it would be ensured that 60 per cent “poor” consumers are not burdened more than Rs500 per month. However, he added, gas prices for big consumers would definitely go up significantly as the product imported at $13.5 per unit could not be sold at $1.5 at home, resulting in a loss of over Rs350 billion annually to gas companies.

Minister hints at debt restructuring, increasing share of renewables in energy mix

The minister said power and privatisation divisions had meetings with the World Bank and its commercial arm — International Finance Corporation (IFC) — and now the focus would be on LTCAs for 10 power companies on the pattern of Islamabad International Airport being pursued by the IFC as transaction adviser.

He said a total of 14 units of the power sector were on the privatisation list already approved by the previous elected governments which also included two LNG-based power plants — Haveli Bahadur Shah and Ballocki — 747MW Guddu power plant and 525MW Nandipur power plant.

The minister, however, hastened to add that a summary would be taken to the federal cabinet for approval with three options, including giving Discos to the respective provinces, outright privatisation and LTCAs. He said the final decision would be taken by the cabinet, but long-term concession agreements appeared practical given the fact that it ensured job security and did not need to lay off employees of Discos and its ownership still remained with the government.

The minister said the caretaker government may not be able to complete these transactions during its limited tenure but would at least begin and take the process forward.

He said the LTCAs would be designed in a manner and there were examples globally that managements are given to the private sector against performance and investment targets and the contractors earn their returns against the improvement they make to the respective firms. He said the same pattern of LTCA would be applied across the Discos to ensure uniform structure.

In the meanwhile, however, the power division, in consultation with other stakeholders, would change board of directors where necessary so as to improve management of the Discos and his division was currently working on evaluation of boards of various companies, the minister added.

Published in Dawn, September 26th, 2023