Pakistan to follow Turkish model of outsourcing power distribution companies 

The Government of Pakistan has decided to follow the Turkish model of outsourcing the management of power distribution companies (DISCOs) to the private sector, in a bid to reduce losses, improve efficiency and attract investment.

Express Tribune reported that the decision was taken in a meeting of the Cabinet Committee on Privatisation (CCOP), where it was agreed that the government would engage a transaction adviser for long-term concessions by the end of April 2024. 

The World Bank has offered technical assistance and risk guarantee instruments for the process, while the International Finance Corporation has expressed interest in providing transaction advisory services.

The CCOP was informed that the Turkish model had delivered the benefits of private sector participation in 20 DISCOs, which resulted in lower losses, better service quality, higher investment, and minimal tariff increase. 

The meeting also noted that the privatisation of DISCOs had faced legal and political challenges in the past and that the transfer of DISCOs to provincial governments was unlikely to bring the desired results.

The Power Division proposed that initially two smaller DISCOs, the better-performing Gujranwala Electric Power Company (Gepco) and the poor-performing Hyderabad Electric Supply Company (Hesco), may be earmarked for the concession model. 

The Power Division said that the power sector's difficulties stemmed primarily from the operational performance of 10 DISCOs, which faced poor governance and inadequate investment.

The CCOP observed that the case relating to private sector participation in the operation of DISCOs through long-term concession contracts fell within the domain of the Privatisation Commission rather than the Power Division. Therefore, the matter should be dealt with by the Privatisation Commission.