Essential Services Act enforced in power sector to avert protests ahead of privatisation

The government has enforced the Essential Services Act for all employees of Pakistan’s power sector, including distribution companies (Discos), generation companies (Gencos), and the National Transmission and Dispatch Company (NTDC). 

According to a recent notification issued by the Interior Ministry, the act will remain in force for six months, starting from July 27, 2024.

According to a news report, the enforcement is intended to maintain uninterrupted operations and prevent protests from employees as the government moves ahead with its privatisation plans for the power sector. 

The government’s privatisation plan includes major power distribution companies such as Islamabad (Iesco), Gujranwala (Gepco), Faisalabad (Fesco), Lahore (Lesco), and Multan (Mepco). The privatisation process is set to commence in April 2025, with calls for expressions of interest being issued. The transactions are expected to be concluded within three to six months.

This initiative is aimed at improving operational efficiency, reducing financial losses, and attracting private investment into Pakistan’s energy sector. The government faces substantial challenges in the energy sector, including frequent power outages, high transmission losses, reliance on imported fuel, and an overwhelming circular debt burden. 

The notification indicates that the government is exercising its powers under the Pakistan Essential Services Maintenance Act, 1952, to ensure compliance with the act. If necessary, the act could be extended beyond the initial six months.

The notification, invoking sub-section (1) of section 3 of the Pakistan Essential Services Maintenance Act, 1952, declares the power sector entities essential services for a six-month period. Should further extension be required, a reference must be submitted to the Interior Ministry two months before the current period’s expiry.