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Dissolution of Pepco being reviewed

electricity pakistan newsLAHORE: In an interesting turn of events, the government seems to be having second thoughts about disbanding the Pakistan Electric Power Company (Pepco), but is keeping the matter secret to avoid any negative media fallout.

According to insiders dealing with the reform process, the government has woken up to the enormity of the task and its massive negative consequences and is now thinking of keeping the organisation intact, at least for quite a while.

The transition team has realised that it has to arrange Rs300 billion, and ballooning by the day, circular debt and working capital of Rs400 billion of independent distribution and generation companies before it can develop a workable model, which will have its own and even bigger financial and administrative consequences.

Citing two recent indications, officials of the water and power ministry maintain that the Planning Commission and the finance ministry appear to have started applying delaying tactics.

At the last meeting of the transition team on Oct 19, deputy chairman of the Planning Commission Nadeem-ul-Haq said the job was difficult and Pepco was going to stay for “quite some time”. He reportedly asked the Pepco’s caretaker managing director to convene a meeting of chief executives of distribution companies and convey them the new decision.

The managing director convened the meeting on Saturday and told the CEOs of distribution companies that “Pepco is going to stay for a while”. He also told them that the “change of heart at the government level has been caused by the feared financial impact. It will be hard to sustain the sector without an integrated account.”

On Oct 1, Water and Power Minister Raja Pervaiz Ashraf had said at a press conference that Pepco would be dissolved by 31st of this month as part of the power sector reforms. During the transition period, he said, a steering committee would look after the sector.

The committee comprises ministers of water and power, finance and petroleum and natural resources and deputy chairman of the Planning Commission. A transition team was constituted.

“The problem with the transition team is that it does not have practical experience of utility management,” said an official of the water and power ministry.

The team has the PC deputy chairman as its chairperson and water and power secretary as member. Secretary Javed Iqbal joined the ministry on Oct 5 and since then he is in Brussels to attend a meeting of the Friends of Democratic Pakistan. “He (Mr Iqbal) has no experience of the sector,” the official said.

Other members of the team are: Shahid Sattar, director general of economic reform unit in the finance ministry and a consultant with the water and power ministry; Arshad Mahmood, another consultant with the water and power ministry; Fahim Mirza, a financial expert from the private sector; Anwar-ul-Haq, general manager (finance) of Wapda; Abdul Malik, chief executive of a generation company (Genco-II) and a thermal engineer; Iftikhar Khalil, a civil engineer who once worked in Nespak; and Naveed Ismail, former CEO of the KESC. He was removed from the post following a resolution passed against him by the Sindh Assembly. He is the only man in the team who has some experience in utility management.

The Pepco managing director is part of the team, but he has not yet been named as the company is currently being looked after by the chief executive of the National Transmission and Dispatch Company.

“One can imagine how difficult for this team of novices to deal with the sector, leave alone reform it,” the water and power ministry official said.

“The team has now come to realise that financial position of the country and the power sector is too precarious to tinkering with the sector. Dealing with issues like circular debt, fuel, consumer and generation mix and working capital is simply not possible, given the financial condition of the state. The team is now trying to find some way out of the imbroglio,” he claimed.

The team has to submit a report to the water and power minister when he will return from the US after attending the strategic dialogue.

Things would start becoming clear after that, the official added.

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