Power generation: Company formed to oversee and control operations

Private sector will take decisions and enjoy financial autonomy without govt intervention.


Express October 06, 2011

ISLAMABAD:


The government on Thursday established a holding company and merged policymaking for all power generation companies while keeping their operational independence, taking power sector reforms a much-needed step forward.


“To fast track structural reforms in power generation companies, the government has decided to amalgamate policymaking for four power companies for an interim period,” said a senior government official.

The decision was taken in a meeting of the cabinet committee on restructuring, headed by Finance Minister Dr Abdul Hafeez Shaikh.

The official said the private sector will have a decisive role in decision-making and will enjoy financial autonomy and independence from government intervention.

The cabinet committee on energy sector had decided the other day to first undertake reforms in the sector and introduce corporate governance and then the government will inject more money.

The restructuring committee constituted board of directors for Genco Holding Company and sent names to the prime minister for approval. Broader criteria for directors will be that they will be non-controversial figures, having sound knowledge and no political affiliation, the official said.

The government has already finalised details for handing over management of power generation companies to the private sector for a period of 10 years. The Economic Coordination Committee (ECC) of the cabinet has approved operational outsourcing on assumption that the move may lead to an increase of 1,243 megawatts in power supply and savings of Rs82 billion this year alone.

Total power generation capacity of the four companies having 10 plants is 4,900 megawatts with minimum efficiency of 24 per cent and maximum efficiency of 31 per cent, said a finance ministry official. Currently, they are generating up to 2,000 megawatts, as most of these plants are fuel-guzzlers.

The government has come under extreme pressure to resolve the power crisis, as people have started agitating in streets and damaging public property. The finance ministry official said there was no significant gap between demand and supply on Thursday and 14,150 megawatts was available in the system.

The restructuring committee also constituted board of directors of Central Power Purchase Authority (CPPA), an entity that will replace Pakistan Electric Power Company (Pepco) that will be dissolved by October 30, said the official.

The government has thrice extended the deadline to dissolve Pepco, originally planned for June 30. The CPPA board has been constituted for an interim period of three months.

The committee decided that two representatives from the government, two from the private sector, two from distribution companies and two from consumers would be included in the board of directors. It also approved new board of directors for Sukkur Electric Power Company (Sepco).

The committee also decided to fast track the process of appointing chief executive officers of nine power distribution companies. It directed their boards of directors to conduct interviews today (Friday) and send three names for each company. Around 200 applications have been received for the posts of CEO, said the official.

The senior government official said the government has yet to precisely determine subsidy requirement for the power sector this year. He, however, said the process will be completed before next cabinet meeting.

He said it is not yet clear whether the government will provide subsidy from the budget or will raise money from international lending agencies. He said the government was in talks with these institutions for project loans.

The government has earmarked Rs122 billion subsidy for the current fiscal year. According to some estimates, the amount could shot up to Rs300 billion.

Published in The Express Tribune, October 7th, 2011. 

COMMENTS (1)

Sher Ahmed Khan | 12 years ago | Reply

Irresponsible.. International Protocol ..they will end up spending on standard of living!

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