With the government ready to privatize many state owned assets, it isn’t ready to conditionally hand over power distribution companies to provinces. The major reason for that is the condition set by the provinces which bonds the federal government to provide subsidies continuously for five years after the transfer. The government feels that this condition is unacceptable.
Mohammad Zubair, Chairman of the Privatization Commission, while briefing the Senate’s Standing Committee on Privatization said that he fully supports privatization of electric companies citing the request of the Sindh chief minister to the government to hand over Sukkur and Hyderabad electric supply to the provincial government. The request aims at avoiding another K-Electric like situation which is blamed for excessive load shedding during Ramadan, resulting in the death of up to 1000 people. However, Mr. Zubair feels that K-Electric has been performing well, and isn’t responsible for the heat wave deaths. He said Lahore experiences 6 hours of load shedding daily, while Karachi experiences 6 hours of load-shedding monthly. He further went on to say that Harvard Business School regards K-Electric as a successful institution.
The Senate’s opposition responded to Mr. Zubair’s claims by stating that the federal government had 26% share in K-Electric, and yet it didn’t intervene even when people were dying. The opposition also said that there were grey areas in the K-Electric agreement since the supply of electricity from the national grid was agreed on 300 megawatts while 650 megawatts was being supplied. K-Electric was purchasing this electricity at Rs 1.50 per unit from the government and selling it to the consumers for Rs 22 per unit! However, the Senate’s standing committee directed the Privatization Commission to give more authority of power distribution companies to the provincial government before they are privatized. This will give the provincial government an upper hand in avoiding the current K-Electric type situation in the future.
Mr Zubair responded to this by saying that the government has leant its lesson from the privatization of Karachi Electric Supply Company. He also said the government would consider giving some authority to the provinvial governments. The government is going to privatize many assets in the power sector which will help generate $4-5 billion next year. A total of 69 entities will be privatized, including PIA and Pakistan Steel, with the government expecting to collect $40 billion from their privatization.