Privatisation of DISCOs

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THE Cabinet Committee on Privatization (CCOP), in its meeting on Tuesday, discussed a summary tabled by the Privatization Commission (PC) related to private sector participation in the management of the power distribution companies (DISCOs) and directed the Commission to present a detailed presentation on the matter.

It also sought a complete evaluation of the assets of the DISCOs by a reputed evaluation firm and a synopsis of their financial health.

The issue of privatization of DISCOs has remained on the agenda of the PC and the successive governments since long but unfortunately consensus could not be evolved on how best to undertake this important task.

The detailed presentation required by the CCOP might help crystallize the situation enabling the authorities concerned to take a decision that suits the interests of the power sector, the country and the consumers but we have been emphasizing in these columns that the best option would be to hand over the control and management of all the DISCOs to the provinces concerned.

The major reasons behind the proposal to privatize the distribution companies is the widespread theft, line losses caused by technical issues and non-collection of dues both from individual consumers and institutions.

Attempts were made in the past by the Federal Government and DISCOs to improve the situation but desired results could not be achieved in this regard due to lacklustre response from the provinces which have the necessary wherewithal for the purpose.

The National Electrical Policy 2021 also envisages role and responsibility of the provinces and law-enforcing agencies while provinces also has the mandate for power generation and management and Sindh is already doing so at a reasonable level.

The Government seeks to involve the private sector in the management of the distribution companies with the objective of overcoming their losses and improving their performance but such experience in some sectors including Pakistan Railways has not proved beneficial neither for the country nor for the people.

We also witnessed in the case of K-Electric that the private sector could not fulfil its contractual obligations effectively, especially in making necessary investment to improve services for consumers.

There are also other best practices in the world that can successfully be emulated in Pakistan like the Philippines where the private utilities provide services to large commercial centres and the rest of the country is served by the state-owned utilities.

Again, if involvement of the private sector is found to be the most suitable option then the contract to be signed should be comprehensive and clear in every respect providing details about rights and obligations of buyer including those relating to the quality of service, revenue or cost sharing, and penalties in case of violations.

 

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