Privatisation of WAPDA Companies (Gencos & Discos) Postponed

Category: WAPDA

Privatisation of WAPDA Companies (Gencos & Discos) has been differed or postponed by Council of Common Interests (CCI) on February 1, 2011:

Council of Common Interests (CCI) on Tuesday deferred the issue of privatization of three electricity generation companies (Gencos) and eight electricity distribution companies (Discos) till the next CCI meeting.

Prime Minister Presiding over Meeting of CCI in Islamabad
Prime Minister Presiding over Meeting of CCI in Islamabad

The CCI met with Prime Minister Yousuf Raza Gilani in the chair here at the PM Secretariat and was attended by the chief ministers of three provinces. Since the summary for privatisation of Gencos, and Discos was circulated to the members of the council late, therefore, the provincial governments could not study it in detail so as to give their input.
The CCI also failed to resolve the important issue pertaining to the payment of employees of devolved ministries. The CCI took up the issue of provision of funds to cater for the salaries of employees and budget for the ongoing projects of the ministries being devolved and decided to form a committee headed by Finance Secretary Dr Waqar Masood and consisting of all the chief secretaries to work out the financial implications and measures to raise the requisite funds.
The prime minister will subsequently hold a separate meeting with the chief ministers of all the four provinces to look at the political aspects of the recommendations. Dr Waqar Masood stated this during an interaction with a select group of journalists soon after the CCI meeting that the committee had been mandated to work out the financial impact in terms of salaries of employees of the devolved ministries.
The CCI approved the tight gas exploration policy and decided that details of estimation and pricing would be worked out in consultation with the provinces. The Council was informed that tight gas exploration is quite an arduous task and the technology required is quite expensive and that the exploration companies do not opt for exploration unless given more incentives.
Six new incentives were proposed to attract companies and it was mentioned that even after giving additional incentives the cost of gas available would be less than that of imported gas, US $6.5 BTU compared to imported gas price of $12.3 BTU. The people of the area will be taken into confidence and development of the area will be a part of the policy.
With regard to replacement of tube-wells with better technology, which would help save 1,100MW of electricity and ultimately lead to possible withdrawal of subsidy on agricultural tube wells, it was observed that this matter does not fall within the purview of the Council of Common Interest. It was, therefore, decided that the federal government would resolve the matter with the respective provincial governments separately.
In his opening remarks, Prime Minister Gilani said that the agenda of the meeting includes critical issues like financing of the projects being devolved to the provinces, remedial measures to meet the energy crisis, discontinuation of subsides in view of the financial crunch and management outsourcing of power sector entities through the Public Private Partnership (PPP).
He said it was the 4th meeting of the CCI after the Eighteenth Amendment and the democratic government strongly believes in provincial autonomy and participative management both by the federation and the provinces and it had amply demonstrated this through its actions.
He said the addition of very important subjects in the Federal Legislative list part-II, for which a policy is formulated and regulated by the Council of Common Interest (CCI) under Article 154 of the Constitution, is indicative of our sincere intention to decide various matters through mutual consultation and discussion.
The prime minister expressed his immense satisfaction that provinces through CCI are participating in major policy formulation on the issues of national importance. He said the 7th NFC Award provides for allocation of more than 50% funds of the central pool to the provinces, which will improve the economy of the federating units.
He further said that expenses on the war against terror, rising prices of oil in the international market and recent floods in the country had adversely affected finances of the federation as a result of which the government had to scale down its development activities. He maintained that the federal government, despite difficulties, has recently released around Rs4,000 million to the provinces only for the flood victims.
In order to provide immediate fiscal comfort to the provinces, he said it has been decided to transfer the funds for the transferred activities and manpower of the devolved ministries budgeted in the year 2010-11, to the provinces/federal territories on pro-rata basis.
The prime minister pointed out that the country was facing an acute shortage of energy, especially in the winter season when utilization of gas increases. He said that this gap in demand and supply has critical social and economic repercussions for the country, that require immediate attention and we need to explore alternative avenues. He said exploration of tight gas reservoirs of the unconventional hydrocarbons was one such alternative.
Unlike natural gas, tight gas is always found in very tight sands/formations, which make it difficult to flow because of low permeability. He observed that the exploration/production of tight gas is subject to high risk and high cost requiring advance technologies. “Because of the exorbitant costs and risks, the companies which have already discovered tight gas reservoirs, are not actualizing these discoveries.”
He suggested that we should encourage only those companies that have international credibility and should be selected through transparent system. The prime minister said that another burning issue is rationalisation of subsidies, as with the present meager resources it is very difficult for the federal government to continue with these even for agricultural tube-wells.
He mentioned that majority of the farmers are using diesel tube-wells and subsidy to electric tubewells was promoting a sense of discrimination. He asked the CCI to take a decision on this issue.
On privatisation, the prime minister said there were some issues like the share of government in the strategic management and modalities of public private partnership. As representatives of the people, he said, we have to watch their interests as well.
He mentioned that our experience of handing over the strategic management to the private sector with reference to the Karachi Electric Supply Company and PTCL had posed some challenges and at times, the government has had to step in to resolve the issues.
The prime minister assured the federal government’s readiness to help the federating units in handling their new responsibilities. “We shall always be there where the provinces need us. You will never find us following you in your hour of greatest need.”
The meeting was attended by the Mian Shahbaz Sharif, Syed Qaim Ali Shah, Sardar Aslam Raisani and information minister Khyber Pakhtunkhwa Mian Iftikhar Hussain Shah, all members of CCI and the four provincial chief secretaries.

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