The World Bank has proposed transferring the ownership of 10 power distribution companies (DISCOs) to the president of Pakistan before their privatisation.
The Express Tribune reported that the Power Division officials, during a Senate Standing Committee on Privatisation meeting, revealed that the World Bank outlined at least nine conditions for DISCO privatisation, with only two met so far. The recommendations include notifying tariff rules, clarifying subsidies, and revising eligibility criteria for licenses.
The World Bank has also emphasized cleaning up DISCOs’ balance sheets, recognizing liabilities, and implementing a clear electricity policy to define roles and responsibilities aimed at reducing technical and commercial losses. Officials expressed optimism that the remaining seven conditions would be met by January 2025.
The privatisation process is backed by the World Bank under its Non-Lending Technical Assistance program. However, Federal Minister for Privatisation Abdul Aleem Khan stressed that unresolved legacy issues and off-balance sheet liabilities must be addressed before moving forward.
The additional secretary of the Power Division disclosed that the government’s uniform tariff policy would remain intact even after privatisation. This means consumers in efficient regions, like Punjab, will continue subsidising those in areas with higher line losses, such as Sindh and Balochistan. Furthermore, the government will maintain subsidies for privatised companies, keeping the budget under strain.
In August, the cabinet approved the phased privatisation of DISCOs. In the first phase, profitable entities such as Islamabad Electric Supply Company, Faisalabad Electric Supply Company, and Gujranwala Electric Power Company will be sold outright.
The second phase will include loss-making entities like Lahore Electric Supply Company, Multan Electric Power Company, and Hazara Electric Supply Company, while the highest loss-making firms, such as Hyderabad and Peshawar DISCOs, will be offered under long-term concession agreements.
Privatisation Secretary Usman Bajwa confirmed that financial advisers for the first three DISCOs would be hired by the end of November. These advisers will evaluate whether the profitable entities should be sold together or in stages.
