Strategic Delay in Privatization of Energy Companies by the Govt

Written by  Published by:Pakistan Views Saturday, 04 July 2015 14:55

ISLAMABAD: The government has reportedly pushed back its privatisation plan for all power distribution companies by almost a year, raising doubts about plans to privatise the loss-making state enterprises, a report in the local media said on Saturday.

Against the original plan to sell the Faisalabad Electricity Supply Company (FESCO) by August this year, the government has delayed the strategic sale till March next year, according to a latest report of the International Monetary Fund.

The privatisation of Lahore Electricity Supply Company (LESCO) and Islamabad Electricity Supply Company (IESCO) had been planned for October this year, but the timeline was first revised to December and now has been delayed for another six months to June next year, showed the report.

By the time the fresh deadline will approach, the government will have completed three years in office, making it more difficult to undertake politically unpopular decisions, according to analysts.

Privatisation Commission Chairman Mohammad Zubair told the paper that non-resolution of regulatory and labour issues were the reasons behind the delay in privatisation of the power distribution companies.

“Many enterprises that are going to be more difficult to privatise are still on the agenda and the timetable has been pushed back,” said Harald Finger, IMF Mission Chief to Islamabad, while addressing a teleconference on Thursday.

Finger said from now onwards, there will be progress and as an initial step, Pakistan will determine multi-year tariffs for three power distribution companies, which the IMF will monitor under the programme.

Privatisation is always complex all over the world, said Finger while responding to a question on the government’s preference to sell shares of profitable companies.

In the last two years, the government has raised Rs 170 billion by off-loading shares in three highly profitable banks and in Pakistan Petroleum Limited. It undertook only one strategic sale of Heavy Electrical Complex (HEC), but it failed.

The government had also planned to complete the second strategic sale of National Power Construction Company before June this year. However, this has also been delayed for now, said the report.

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