ACCORDING to media reports, the Government has decided to hand over 10 power Distribution Companies (Discos) to the private sector with a view to reducing financial burden on the national exchequer.
As per plan five Punjab-based financially sound Discos would be given to the private sector under 10-year Concession Agreements (CAs) while five loss-making and financially weak Discos in three other provinces would be given to the investors on the basis of management contracts for five years.
The power sector has become a bleeding wound of the national economy with the Government finding it helpless in the face of growing theft and line losses as well as a sharp increase in the circular debt.
This state of affairs cannot sustain for long and therefore, the plan evolved by the Government seems to be the best course provided it is implemented in letter and spirit both by the Government and the prospective investors.
This is because under the concession agreement, the party that acquires a company for 10 years, will have to invest from its own resources to improve the distribution and transmission infrastructure including transformers, ABC bundle cable and other related equipment and get return on its investment.
Similarly, the government will invest in the five financially weak companies to improve their infrastructure, reduce losses and improve recovery.
However, much depends on actual implementation as we have a bitter experience of K-electric where the investor has not lived up to its commitment of making necessary investment on generation and distribution network.
With this in view, there should be necessary safeguards in contracts setting clear time-bound goals and their monitoring by an effective and vigilant body.
The deals should also lead to improvement in the service and elimination of rampant corruption.