Running out of power

The attempt to privatise three distribution companies may be running into trouble

The roadshows by the Privatization Commission in Turkiye, Saudi Arabia and China, trying to pushFesco  (Faisalabad Electric Supply Company), Gepco (Gujranwala Electric Power Company), and Iesco (Islamabad Electric Supply Company) were not wild successes, but nor could they be described as flops. They accompanied eight roadshows in the country, with 30 local business houses and 23 international investors contacted. This all served to make one important change in the terms of privatization which may point out a flaw in the corporatisation of WAPDA, with a view to privatisation. The privatized entities are to be allowed permission for self-generation, while both foreign and local investors expressed concerns about regulatory interference and policy continuity. It may well be too late to discuss the whole privatisation concept, but it should be noted that the only previous power privatisation, that of K-Electric, gave the only distribution company with permission for self-generation, which it intends to use effectively. It thus makes sense for interested parties to want self-generation. What effect this will have on the privatisation of the three generation companies which have been hived off, is not known.

The claim of the government that the rate of return could go up to 30 percent, while a rate of 14 percent was assured does beg the question of why it was necessary to privatize DISCOs with such potential, even as it seems that the only real motive has been to keep the IMF happy. The IMF’s constant pressure on the energy sector has been something the government has had to accept as the price of doing business with tjr IMG, but that ford not seem to have led to positive results.

The failed PIA privatization of 2024 see,s have cast a long shadow across the entire privatization programme, even though PIA was successfully privatised a year later, many of the fears now being expressed by potential buyers, especially foreign investors, can be traced back to that transaction. It almost seems as if that transaction is being held over the government’s head as a stick to beat it with, rather than as a genuine cause of concern. The government needs to be particularly cautious as privatisation means the ability to allow electricity theft by certain individuals in return for support moves into private hands. This is the privatization which, more than most, changes the power equation.