Policy on privatising power sector companies remains vague

First meeting of special committee dwells on issues of governance and pay packages

ISLAMABAD:

The government’s policy on power sector privatisation remains ambiguous, as it has excluded it from the terms of references (ToRs) of a cabinet committee Prime Minister Nawaz Sharif constituted on the matter.

The first meeting of the “committee on power sector privatisation” was held at premises of the Ministry of Water and Power on Wednesday, and was attended by three cabinet ministers.



However, instead of discussing the sector’s privatisation, the committee dwelled upon issues related to improving governance and reviewing the pay and remuneration packages of the employees of power distribution companies, said officials who attended the meeting.

Water and Power Minister, Khawaja Asif, who is said to be a staunch opponent of the sector’s privatisation, heads the committee. Information minister Pervaiz Rashid and Privatisation Commission Chairman Mohammad Zubair are members of the commission.

Real motive?

Exclusion of privatisation from the ToRs has raised concerns over the government’s intentions. Experts have asserted that the government seems to be buying time instead of pushing forward the agenda of privatising all power distribution and generation companies.

The government has committed with the International Monetary Fund (IMF) that it will privatise the power sector within its tenure. It has already missed a deadline on Faisalabad Electricity Supply Company (Fesco) privatisation.





The privatisation of the power distribution companies was gradually progressing and the government had hired financial advisers for privatisation of most of the distribution companies. However, it started giving mixed signals from last month when it did not formally close the process of inviting Statements of Qualifications from prospective bidders of Fesco.

IMF factor

The meeting comes at a time when Pakistan and IMF are negotiating for the tenth review of Pakistan’s economy and progress on privatisation of loss-making entities will be one of the main contentious issues.

According to the agreed four ToRs, the privatisation committee would set timeline-based targets for reduction in line losses, improving recovery of bills and efficiency of power generation and distribution systems.

Secondly, it will strategise and put up formal recommendations for getting rid of corrupt practices and inefficient human resources within the power generation and distribution companies as well as redesigning the overall human resources strategy to ensure efficient operation of public assets in the power sector.

Additionally, the committee will comprehensively review pay and remuneration packages of the employees and work out a performance based system where adequate measures are taken for welfare of well performing public sector employees in these companies.

Finally, a timeline based strategy will be finalised to bring the power sector back to being a self-sustaining and profit generating sector without any undue burden on public.



Government’s intention

The ToRs suggest that the government does not have any aims to privatise the sector and is focused on improving efficiency.

“Privatisation and increasing efficiency of the power sector can be done simultaneously,” said Zubair after the committee meeting. He insisted that the government has not abandoned the power sector privatisation plan but admitted that there was no link between the committee’s name and its ToRs.

Zubair said that the PM decided to constitute the committee after holding a meeting with representatives of employees of power distribution companies. The meeting was held in November where the employees demanded that they should be given targets to improve performance instead of privatising the entities.

He said in its first meeting the committee decided to finalise a time-bound agenda for improving the progress of the power sector, which will be subsequently submitted to the Cabinet Committee on Energy for final approval.

Published in The Express Tribune, January 28^th,  2016.

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