PEPCO no more

Government announces orders to dissolve Pepco, heralding an end to universal electricity tarrif regime nationwide.

Orders to dissolve Pakistan Electric Power Company (Pepco) have been issued, Raja Pervez Ashraf, Federal Minister for Water and Power said on Friday.

Speaking to the media in Islamabad, Ashraf said Pepco had been facing huge losses and had been facing a circular debt of Rs400 billion.

Distribution companies will now function as independent entities and will be responsible for meeting their own expenses, he said.

Deputy Chairman Planning Commission Dr Nadeem ul Haq had earlier announced that the government had committed with the IMF to dissolve Pepco before October 31, which would herald an end to universal electricity tariff regime nationwide. The disbanding was said to be part of a larger plan of resolving problems plaguing the energy sector.

Pepco had been putting undue strain on the government's already limited public resources due to inefficient functioning. Donors had been pressurising the government to de-regulate Pepco and its distribution companies and avoid subsidising electricity.

Ashraf has announced that a team has been formed to oversee the transition process. The move comes in accordance with the government's commitment with the IMF to dissolve Pepco, withdraw tax exemptions on goods and levy 15 per cent tax on services too from October 1. Under the new tariff regime the government will not pick up the line losses and cost of electricity of power distribution companies.