Backpedalling on Discos sell-off to hit projects
Govt promised China selective privatisation of power companies
PHOTO: AFP
ISLAMABAD:
The government’s backpedalling on power sector privatisation may have adverse implications for the $37 billion worth of energy projects of the China-Pakistan Economic Corridor (CPEC), as Islamabad has committed with Beijing for ‘selective privatisation’ of distribution companies, reveal documents.
The country has given sovereign commitments that it would pursue the policy of selective privatisation of power distribution companies to reduce the sector losses, disclosed the CPEC Energy Project Cooperation Agreement, which was signed by both the countries in November 2014.
US keen to invest in economic corridor projects
Unlike commitments given to the International Monetary Fund under the $6.4 billion bailout package that would end in September this year, the cooperation agreement would bind the successive governments to implement the treaty in letter and spirit as long as Chinese have interest in the energy sector.
"The Pakistani side affirms its commitment to follow its policy of selective privatisation of distribution companies on a conditional basis that power losses would be reduced in a gradual manner," reads Article 5 of the CPEC Energy Cooperation Agreement.
The selective privatisation means that those Discos will have to be privatised where the CPEC energy projects will be located in order to reduce the line losses and improve their efficiency, said an official of the Ministry of Water and Power. He said if the government manages to improve the sector's performance, the selective privatisation would not be required.
Pakistan and China inked the $46 billion CPEC Framework Agreement for building a network of roads and energy projects. The major component of the CPEC comprises 17,045 megawatts energy projects valued at over $37 billion.
The CPEC energy projects are planned to be set up the territories of Quetta, Multan, Sukkur and Peshawar power distribution companies.
CPEC for Punjab or Pakistan: Myth and reality
After finishing technical work on privatisation of all power distribution and generation companies the government has lately halted the sector's privatisation.
On Friday, Privatisation Commission Chairman Mohammad Zubair said the government delayed Faisalabad Electricity Supply Company (Fesco) privatisation to avert possible strike by the employees of power distribution companies. Zubair said the authorities were waiting for conducive environment for Fesco’s privatisation.
The Ministry of Water and Power remains staunch opponent of the power sector privatisation, although the government has already hired financial advisers for the sale of all the power distribution companies.
The government is afraid that it will be difficult to handle over 380,000 employees of power distribution companies, if they come on streets to protest the planned privatisation.
Official version
The CPEC Cooperation Agreement simply reflects Pakistan's policy on power sector privatisation and reduction in line losses in a gradual manner, said a Water and Power Ministry spokesman.
CPEC- a window of opportunity for Pakistan
He said that the situation in power sector has improved a lot in last one year and aggregated technical and commercial (ATC) losses remarkably reduced by 5% to 23.5%. The spokesman went on to say that due to these improvements, China did not show further concerns during last couple of high level meetings.
He said improvement in the ATC losses would address the concerns of the Chinese authorities.
Published in The Express Tribune, March 2nd, 2016.
The government’s backpedalling on power sector privatisation may have adverse implications for the $37 billion worth of energy projects of the China-Pakistan Economic Corridor (CPEC), as Islamabad has committed with Beijing for ‘selective privatisation’ of distribution companies, reveal documents.
The country has given sovereign commitments that it would pursue the policy of selective privatisation of power distribution companies to reduce the sector losses, disclosed the CPEC Energy Project Cooperation Agreement, which was signed by both the countries in November 2014.
US keen to invest in economic corridor projects
Unlike commitments given to the International Monetary Fund under the $6.4 billion bailout package that would end in September this year, the cooperation agreement would bind the successive governments to implement the treaty in letter and spirit as long as Chinese have interest in the energy sector.
"The Pakistani side affirms its commitment to follow its policy of selective privatisation of distribution companies on a conditional basis that power losses would be reduced in a gradual manner," reads Article 5 of the CPEC Energy Cooperation Agreement.
The selective privatisation means that those Discos will have to be privatised where the CPEC energy projects will be located in order to reduce the line losses and improve their efficiency, said an official of the Ministry of Water and Power. He said if the government manages to improve the sector's performance, the selective privatisation would not be required.
Pakistan and China inked the $46 billion CPEC Framework Agreement for building a network of roads and energy projects. The major component of the CPEC comprises 17,045 megawatts energy projects valued at over $37 billion.
The CPEC energy projects are planned to be set up the territories of Quetta, Multan, Sukkur and Peshawar power distribution companies.
CPEC for Punjab or Pakistan: Myth and reality
After finishing technical work on privatisation of all power distribution and generation companies the government has lately halted the sector's privatisation.
On Friday, Privatisation Commission Chairman Mohammad Zubair said the government delayed Faisalabad Electricity Supply Company (Fesco) privatisation to avert possible strike by the employees of power distribution companies. Zubair said the authorities were waiting for conducive environment for Fesco’s privatisation.
The Ministry of Water and Power remains staunch opponent of the power sector privatisation, although the government has already hired financial advisers for the sale of all the power distribution companies.
The government is afraid that it will be difficult to handle over 380,000 employees of power distribution companies, if they come on streets to protest the planned privatisation.
Official version
The CPEC Cooperation Agreement simply reflects Pakistan's policy on power sector privatisation and reduction in line losses in a gradual manner, said a Water and Power Ministry spokesman.
CPEC- a window of opportunity for Pakistan
He said that the situation in power sector has improved a lot in last one year and aggregated technical and commercial (ATC) losses remarkably reduced by 5% to 23.5%. The spokesman went on to say that due to these improvements, China did not show further concerns during last couple of high level meetings.
He said improvement in the ATC losses would address the concerns of the Chinese authorities.
Published in The Express Tribune, March 2nd, 2016.