Discos' sell-off/provincialisation: PMO directs Power Div. to expedite consultations
ISLAMABAD: The Prime Minister Office (PMO) has directed the Power Division to expedite the consultative process on Discos privatisation/ provincialisation and develop proposals through Task Force on Power Sector Reforms, well informed sources told Business Recorder.
The finalized proposals shall be submitted to the Steering Committee on Privatisation of Discos.
The Cabinet approved the outright privatisation of three DISCOs—Islamabad Electric Supply Company (IESCO), Faisalabad Electric Supply Company (FESCO), and Gujranwala Electric Power Company (GEPCO)—in its meeting held on August 13, 2024, marking the first phase of the privatisation initiative.
ECC grills PD: Discos' T&D losses total Rs143bn till March
The second phase will include Lahore Electric Supply Company (LESCO), Multan Electric Power Company (MEPCO), and Hazara Electric Supply Company (HAZECO). Meanwhile, Hyderabad Electric Supply Company (HESCO), Sukkur Electric Power Company (SEPCO), and Peshawar Electric Supply Company (PESCO) will be offered under a Concession Model through long-term agreements. Tribal Electric Supply Company (TESCO) and Quetta Electric Supply Company (QESCO) will be retained by the government.
The Power Division, with support from the World Bank under Non-Lending Technical Assistance (NLTA), has completed a consolidated report detailing key deliverables, which has been submitted to the Privatisation Commission. The Power Division has met the Conditions Precedent (CPs) set by the Cabinet Committee on Privatisation (CCoP) and the Government of Pakistan, along with additional requirements identified by the World Bank as of January 31, 2025.
The Financial Advisor for Phase-I DISCOs was appointed by the Privatisation Commission, with the Financial Advisory Services Agreement signed on February 11, 2025. The process is structured into four phases: (i) phase I: Sector-level due diligence, inception report, market sounding, and global experience review – completed by March 18, 2025; Phase II: Company-level due diligence (legal, technical, financial, environmental, and HR) – reports submitted May 8, 2025, currently under review; Phase III: Transaction preparation, including restructuring plans and preliminary financial modeling – due June 20, 2025; and Phase IV: Transaction implementation, including investor roadshows, information memoranda, bidder pre-qualification, bidding documents, contract awards, and financial closure – targeted for completion by January 15, 2026.
On January 1, 2025, Prime Minister had directed Power Division to thoroughly examine the Provincialisation of DISCOs (ie transferring the ownership and control of Discos from the federal government to the provincial governments) in consultation with provinces and prepare a roadmap with the timelines for the review/approval of the Prime Minister. The Prime Minister Office had further directed that Power Division work simultaneously on the privatisation of Discos identified for privatisation in the first phase i.e. IESCO, FESCO and GEPCO. Power Division shall follow the agreed schedule and complete all the prior actions (conditions precedents) before January 31, 2205.
The Committee! constituted by the Prime Minister on Tariff Reduction chaired by the Deputy Prime Minister/Foreign Minister Senator Ishaq Dar has been tasked to thoroughly review the proposal prepared by the Power Division while taking Provincial Governments on board. The firm up proposal shall be submitted for approval of the Prime Minister.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
a day ago
- Business Recorder
Power tariff hike: Govt reaches ‘understanding' with IMF
ISLAMABAD: The government and the International Monetary Fund (IMF) have reportedly reached an understanding that electricity tariffs will be increased through annual rebasing from July 2025 if the power sector's revenue requirements exceed the allocated subsidy envelope of Rs 1.036 trillion for fiscal year 2025–26, well-informed sources in the Finance Ministry told Business Recorder. This understanding was reached during discussions between Pakistani authorities and the visiting IMF mission held from May 14 to 24, 2025. 'Within the Rs 1.036 trillion envelope, sufficient subsidy will be allocated to ensure zero circular debt flow in FY26. The Petroleum Development Levy (PDL)-financed Prime Minister's package—amounting to Rs 182 billion—will be counted toward the FY26 subsidy,' the sources added. Reduced hydropower, costly fuels: Govt warns of potential hike in power bills Both sides also agreed that any additional financial needs will be met through tariff adjustments during the July rebasing exercise while maintaining a progressive power tariff structure, the sources maintained. According to sources, the IMF emphasized the importance of fiscal discipline, with subsidy levels expected to remain within 0.8% of GDP. These subsidies will be linked to credible targets for stock clearance and loss reduction. The Power Division has been directed to take all necessary steps to implement the measures agreed upon with the IMF. The government had earmarked Rs 1.190 trillion for the power sector for FY2024–26. However, the Power Division has also secured approval for additional subsidies to keep the circular debt flow within the limit agreed with the Fund. The Finance Division has revised and communicated provisional Indicative Budget Ceilings (IBCs), allocating Rs 636.136 billion for sector subsidies under the recurrent budget for FY2025–26, up from the earlier allocation of Rs 400 billion. As the detailed breakdown of the revised subsidy for FY2024–25 is not available, it remains unclear whether the full allocation has been utilized by the Power Division or if deviations occurred. Sources within the Power Division believe that subsidies for FY2025 may exceed Rs 1.2 trillion, driven by growing support for residential consumers and persistent circular debt obligations. 'A sharp increase in protected consumer categories—those consuming less than 200 units per month—is driving higher subsidy needs, as more consumers adjust their consumption or install solar panels to stay within the protected threshold,' the sources said. Cross-subsidy pressures are also rising, as declining industrial and commercial consumption reduces the contribution of higher-paying users to the overall system. The government also plans to clear up to Rs 541 billion in circular debt stock during FY2025, as part of a broader six-year debt reduction strategy. 'Subsidy allocations remain a contentious issue, particularly concerning the treatment of PDL proceeds and their role in budget financing,' the sources continued. Tariff rebasing and further adjustments remain under government consideration to close the subsidy gap. However, political sensitivities and lobbying from industrial stakeholders are limiting policy flexibility. The successful implementation of the Circular Debt Workout and Action Plan (CDWAP) and the ongoing restructuring of Pakistan Holding Limited's (PHL) debt are seen as critical to reducing future interest costs and stabilizing circular debt flows. Additionally, the Finance Division has directed the Power Division to strictly follow mandatory instructions issued to all Principal Accounting Officers (PAOs), heads of departments, and related entities when preparing budget estimates for each cost center and account head. Copyright Business Recorder, 2025
Express Tribune
2 days ago
- Express Tribune
Iran urges Europe not to back IAEA resolution on nuclear compliance
'Mark my words as Europe ponders another major strategic mistake: Iran will react strongly against any violation of its rights,' says Abbas. PHOTO: AFP Listen to article Iran warned European powers on Friday against backing a draft resolution at the International Atomic Energy Agency next week accusing Tehran of non-compliance, calling it a 'strategic mistake'. 'Instead of engaging in good faith, the E3 is opting for malign action against Iran at the IAEA Board of Governors,' Foreign Minister Abbas Araghchi said on X, referring to Britain, France and Germany. 'Mark my words as Europe ponders another major strategic mistake: Iran will react strongly against any violation of its rights.' The warning from Iran's top diplomat comes as the three European governments prepare to join Washington in backing a censure resolution at next week's board meeting, a diplomatic source told AFP. The resolution would accuse Iran of failing to meet its nuclear obligations and carries the threat of referral to the UN Security Council if Tehran 'does not show goodwill', the source added. Araghchi said Tehran had demonstrated 'years of good cooperation with the IAEA - resulting in a resolution which shut down malign claims of a 'possible military dimension' (PMD) to Iran's peaceful nuclear programme'. 'My country is once again accused of 'non-compliance,'' he added, blaming 'shoddy and politicised reporting'. UN nuclear chief urges 'more transparency' from Iran After years of good cooperation with the IAEA—resulting in a resolution which shut down malign claims of a "possible military dimension" (PMD) to Iran's peaceful nuclear program—my country is once again accused of "non-compliance". Instead of engaging in good faith, the E3 is… — Seyed Abbas Araghchi (@araghchi) June 6, 2025 The criticism follows a quarterly report from the IAEA last week which cited a 'general lack of cooperation' from Iran and raised concerns over undeclared nuclear material. Tehran rejected the report as politically motivated and based on 'forged documents' it said had been provided by its arch foe Israel. The pressure on Iran comes amid indirect talks with the United States, mediated by Oman since April 12, to forge a new nuclear agreement between the longtime foes. The two sides have been publicly at odds over uranium enrichment, the process that produces fuel for nuclear reactors or, in highly extended form, the material for a nuclear warhead. Iran insists it has the right to enrich uranium under the nuclear Non-Proliferation Treaty and the issue is 'non-negotiable'. But in a post on his Truth Social network on Monday, President Donald Trump said the United States 'WILL NOT ALLOW ANY ENRICHMENT OF URANIUM' by Iran. Tehran and Washington are seeking a new agreement to replace a 2015 deal with major powers which Trump unilaterally abandoned during his first term in 2018. The agreement quickly unravelled as Trump reimposed sweeping sanctions and Tehran began walking back its own commitments a year later. Iran currently enriches uranium to 60 percent, well above the 3.67 percent cap set by the 2015 deal but below the 90 percent threshold required for a nuclear warhead. Britain, France and Germany, which were all party to the 2015 deal, are considering whether to trigger a 'snapback' of UN sanctions under its dispute resolution mechanism – an option that expires on the deal's 10th anniversary in October.
Business Recorder
2 days ago
- Business Recorder
Iran FM warns European powers against ‘strategic mistake' at nuclear watchdog
TEHRAN: Iran warned European powers on Friday against backing a draft resolution at the International Atomic Energy Agency next week accusing Tehran of non-compliance, calling it a 'strategic mistake'. 'Instead of engaging in good faith, the E3 is opting for malign action against Iran at the IAEA Board of Governors,' Foreign Minister Abbas Araghchi said on X, referring to Britain, France and Germany. 'Mark my words as Europe ponders another major strategic mistake: Iran will react strongly against any violation of its rights.' The warning from Iran's top diplomat comes as the three European governments prepare to join Washington in backing a censure resolution at next week's board meeting, a diplomatic source told AFP. The resolution would accuse Iran of failing to meet its nuclear obligations and carries the threat of referral to the UN Security Council if Tehran 'does not show goodwill', the source added. Araghchi said Tehran had demonstrated 'years of good cooperation with the IAEA - resulting in a resolution which shut down malign claims of a 'possible military dimension' (PMD) to Iran's peaceful nuclear programme'. 'My country is once again accused of 'non-compliance,'' he added, blaming 'shoddy and politicised reporting'. UN nuclear chief urges 'more transparency' from Iran The criticism follows a quarterly report from the IAEA last week which cited a 'general lack of cooperation' from Iran and raised concerns over undeclared nuclear material. Tehran rejected the report as politically motivated and based on 'forged documents' it said had been provided by its arch foe Israel. The pressure on Iran comes amid indirect talks with the United States, mediated by Oman since April 12, to forge a new nuclear agreement between the longtime foes. The two sides have been publicly at odds over uranium enrichment, the process that produces fuel for nuclear reactors or, in highly extended form, the material for a nuclear warhead. Iran insists it has the right to enrich uranium under the nuclear Non-Proliferation Treaty and the issue is 'non-negotiable'. But in a post on his Truth Social network on Monday, President Donald Trump said the United States 'WILL NOT ALLOW ANY ENRICHMENT OF URANIUM' by Iran. Tehran and Washington are seeking a new agreement to replace a 2015 deal with major powers which Trump unilaterally abandoned during his first term in 2018. The agreement quickly unravelled as Trump reimposed sweeping sanctions and Tehran began walking back its own commitments a year later. Iran currently enriches uranium to 60 percent, well above the 3.67 percent cap set by the 2015 deal but below the 90 percent threshold required for a nuclear warhead. Britain, France and Germany, which were all party to the 2015 deal, are considering whether to trigger a 'snapback' of UN sanctions under its dispute resolution mechanism – an option that expires on the deal's 10th anniversary in October.
