Power Sector – What is Required?
Evident that power sector issues call for privatization of state-owned entities to make them self reliant – KE’s turnaround success validates the same and has been recognized
What is Required to Privatize XWDISCOs?
Holistic Review of Tariff & Regulatory Regime
Cost reflective tariff enabling recovery of all prudent costs with adequate returns in accordance with NEPRA Act and providing regulatory certainty
Need for Reforms and Policy Changes
Accumulation of government receivables in the form of subsidy, need to phase away from cross-subsidy mode
Streamline process for approvals
Delays in required approvals discourage private investors – even after 3 years, approvals required for SEP’s acquisition of a controlling stake in KE are still pending
Demerge large DISCOs
Demerge large DISCOs for better management and administrative control
"Privatisation of distribution companies only solution to circular debt"
During an interview to a private TV channel, the prime minister said that distribution losses of distribution companies (DISCOs) due to power theft were the major cause of rising circular debt.
He said that except of K-Electric (KE), which regularly paid charges against electricity provided by the government, all other distribution companies had defaulted.
The PM said that the fact that the privatized KE had not contribution in circular debt further supported the government's plans to facilitate private investment in DISCOs.
Planning Shortcomings – Nandipur Project .vs. BQPS II
Comparison below is an evidence to KE’s well thought planning in line with business and service requirements – on the other hand, Nandipur project is a glaring example of cost overruns and planning oversights, costing billions to the economy
Nandipur Power Project – cost overruns, annual plant utilization of less than 40% resulting in loss of billions to the economy
Source: State of Industry Report, 2019, Power Division letter to Transparency International