WB’s South Asia Rep for Energy Meets with Federal Minister of Privatisation

ISLAMABAD: The South Asia Practice Manager for Energy at the World Bank,  Simon Stolp and his team met with Fawad Hasan Fawad, the Federal Minister of Privatisation in Islamabad.

The primary focus was to discuss the government’s agenda for privatization, with a specific emphasis on the performance of Distribution Companies (DisCos) in Pakistan’s power sector.

Minister Fawad Hasan Fawad explained the government’s privatisation agenda, taking into account the legal mandate of the Caretaker Government, with the aim of assisting struggling DisCos and reducing the government’s financial burden through private sector  investments.

The Minister also stressed the need for a two step strategy  for privatisation of DisCos,  potentially involving a concessional model of  management control with subsequent  divestment strategy. Discussions with the International Finance Corporation (IFC) regarding a concession model for DisCos were highlighted.

The Minister of Privatisation conveyed that he was actively engaged in discussions with the Minister of Energy to create a structured timeline for the divestment of DisCos, beginning with concession agreements. Both ministers mutually agreed that this approach represented the most suitable path forward. The Federal Minister also  highlighted the current public opinion favouring privatization as a means to alleviate the financial burden on the national exchequer.

Mr. Stolp reiterated the World Bank’s commitment to supporting different aspects of this transaction in the long term, emphasising the importance of a well-structured transaction template for the Distribution Companies. 

The World Bank’s team of energy specialists pledged to present a template for the most suitable mode of privatization for DisCos to Ministers of Energy and Privatisation within a week. This template would  be refined with expert opinions to support ongoing power sector reform efforts.

The meeting signifies a united effort to reform and privatise Pakistan’s power sector, with the primary goal of addressing financial challenges faced by DisCos while promoting economic growth and long-term sustainability. It is important to note that this is the second meeting between the minister and a representative of the IFC over the topic of SOEs. Pakistan’s SOE’s also featured in the Public Expenditure Review 2023, of the World Bank. The World Bank attributed unsuccessful privatisation efforts to factors such as economic volatility, judicial activism, litigation, weak political commitment, and concerns about corruption.

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