On Monday, Caretaker Federal Minister of Energy Muhammad Ali stated that electricity costs will be reduced by extending loan repayment terms and expanding the energy mix with Thar coal and renewables.
Privatization of Ex-Wapda Distribution Businesses (DISCOs)
The minister indicated in a media interview that the government was considering privatizing all ex-Wapda distribution businesses (DISCOs) under a Long-Term Concession Agreement (LTCA) for 20-25 years. He stated that the federal cabinet would make the final decision.
In answer to a question, the minister stated that gas load-shedding will occur in the coming winters, but that every effort would be taken to ensure that the shortage did not exceed that of the previous year.
Gas Prices Will Hike Soon
Gas prices will be hiked very soon, yet 60% of impoverished consumers would not have to pay more than Rs. 500 each month. He did, however, warn that gas prices for huge users would skyrocket.
The Power and Privatization Divisions conducted discussions with the World Bank and the International Finance Corporation (IFC), and the focus would now be on LTCAs for ten power companies, according to the minister.
Previous governments had already approved the privatization of 14 power sector assets, including the LNG-based 747MW Guddu and 525MW Nandipur power stations.
A report would be provided for approval to the federal cabinet, with officials considering transferring DISCOs to provinces, privatization, and LTCAs.
Plan To Reduce Electricity Cost
According to Muhammad Ali, LTCAs will adhere to worldwide standards of management in the private sector in terms of performance and investment targets, with contractors earning returns based on the changes they achieve. He indicated that all DISCOs would use the same LTCA pattern.
Meanwhile, the electricity division will strengthen DISCO management by altering the Board of Directors if necessary, in conjunction with other stakeholders.
While the caretaker setup may not be able to complete its tasks within its time, the minister stated that it will at least commence and accelerate the process.
To read our blog on “\Discos to collect Rs. 30 bn extra from electricity consumers,” click here.