ISLAMABAD: The government has yet to appoint any financial adviser for three power distribution companies (Discos) and two generation companies (Gencos) selected for the first round of privatisation.

The Power Division disclosed this before the Senate Standing Committee on Power which expressed displeasure over the absence of Power Minister Awais Leghari and Secretary Power Dr Fakhre Alam despite prior commitment and also showed concern over harassment of industrialists in Khyber Pakhtunkhwa who were applying for solar net-metering.

The meeting of the panel presided over by Senator Mohsin Aziz deferred agenda items pertaining to negotiations with independent power producers (IPPs) and matters relating to the disposal of assets (movable/immovable), liabilities, and employees of each Discos on privatisation agenda. Mr Aziz said the meeting had been set in consultation with the minister and secretary of power, who wanted a 20-day gap but did not turn up for the meeting after 36 days.

Additional Secretary of Power Arshad Majeed said both had to attend a meeting at the Prime Minister’s Office. Senator Aziz said he had even spoken to them in the morning and they had promised to join the standing committee meeting.

Senate panel expresses its displeasure over minister’s absence

Another power ministry official, however, reported that the appointment of financial advisers (FAs) for three Discos was under process of the Privatisation Commission, and the federal cabinet had given the Power Division a list of nine conditions precedent for completion by the time FAs were appointed.

He said the sector experts and the World Bank also believed that these actions should be done before FAs were appointed who would then make assessments about all sorts of assets, real estate and employees and their post-privatisation pension benefits etc.

He said the Power Division was required to complete these nine tasks by Jan 31, 2025 but did not explain those conditions. The meeting was told that three Discos from Gujranwala, Lahore and Islamabad had been selected for the first phase of privatisation.

The committee was told that FAs were required to conduct due diligence, based on which transaction structure has to be determined for approval by the federal cabinet. Also, the FAs propose the reserve or base price, terms and conditions of privatisation for the disposal of assets (moveable/ immovable), liabilities and employees, and criteria for determining the value of assets proposed to be privatised.

Regarding Gencos, the committee was told that the Cabinet Committee on Privatisation (CCoP) had decided in May this year that only operating and efficient plants of all Gencos be carved out and offered for privatisation.

It was noted that Nandipur Power Plant (NPP) (part of GENCO-III) and Guddu Power Plant (GPP) (part of GENCO-II) have been part of the Privatization Program since 2019. A consortium was appointed as the FA for NPP in 2020, while efforts to hire an FA for GPP were initiated three times but have yet to materialise. The FA identified nine key issues for both NPP and GPP.

However, the privatisation commission has reissued a Request for Proposals (RFP) to hire advisors for NPP, which is expected to be completed by mid-January 2025. For GPP, the process will begin following the rehabilitation of Steam Turbine ST-16, which is currently non-operational.

KP industrialists

The meeting took up grievances of Khyber Pakhtunkhwa industrialists concerning the harassment by Pesco on the solar system installation. Former President Sarhad Chamber of Commerce and Industry highlighted that Pesco officials created unwanted hindrances to derail the solarisation process. It took 8-9 months to acquire the necessary approval from Pesco.

Similar complaints were also aired by about five or six other businessmen who called for some standard operating procedures (SOP) to ensure that Pesco did not discriminate and work unilaterally and instead provided breathing space for local consumers. One affected industrialist apprised the committee that Pesco had cut the connection despite filing an extension application, which had been pending for more than three months.

Senator Mohsin Aziz lamented that it is unfortunate to witness such a treatment being meted out to industrialists who have been paying their bills and taxes. Senator Hidayatullah Khan opined that the Pesco rules should be amended to lessen the burden of industrialists.

The committee unilaterally directed the Power Division to resolve the grievances of industrialists, as it would help revive the dying industry of Khyber Pakhtunkhwa.

While taking up the matter of excessive billing and loadshedding by K-Electric, raised by Senator Syed Masroor Ahsan, K-Electric officials claimed that there had been zero loadshedding on industrial feeders. However, 30pc loadshedding has been occurring on feeders exceeding the basic transmission limit and distribution losses set by K-Electric.

Published in Dawn, December 13th, 2024