Aziz promises financial autonomy for power distribution companies

* $1.5b given by the World Bank will be delegated to power companies
* New power tariffs will be implemented

By Khalid Mustafa

ISLAMABAD: Prime Minister Shaukat Aziz has assured the World Bank (WB) that the government would soon delegate financial autonomy to power distribution companies (DisCos) to ensure that the $1.5 billion loan given by the WB for power projects is used appropriately, a government official told Daily Times.

The prime minister extended his assurance to John Wall, country director of the WB, in a meeting on Monday, said the official, adding that the government had also agreed to include members from the private sector in the board of directors of each power distribution company.

The WB wanted to allocate a portion of this loan to the secondary transmission lines and grid stations (STG) projects, including 132 kilovolt transmission lines, said the official, adding that the WB also wanted to improve the power distribution system of the DisCos and work on the projects of the National Transmission Dispatch Company (NTDC) to improve their systems all over the country.

Presently, power distribution of the DisCos is unable to sustain the power load, which has swollen due to an increased usage of electricity. In summers, the demand of electricity goes up as air conditioning systems are turned on, and supply goes down, as the power distribution systems are unable to handle this load. This is why the DisCos conduct timed outages, save electricity, and shed the load, he said.

He said the worsening situation of power distribution had caused the WB’s decision to invest in the power sector and the government to extend financial autonomy to all DisCos immediately.

In the meeting, Mr Wall raised the issue of the government not implementing the new power tariffs on the DisCos, which the National Electric Power Regulatory Authority (NEPRA) completed in November 2004 and then re-determined in January 2005, said the official. “At present, the Water and Power Development Authority (WAPDA) is divided into eight separate distribution bodies. The delegation of financial power away from WAPDA is the part of the privatisation of the power sector in the country,” he added. Earlier, the World Bank had also proposed the reconstitution of the DisCos board of directors, he said.

Prior to the meeting with Mr Wall, the prime minister held a meeting with officials of the finance and water and power ministries and WAPDA. Federal Water and Power Minister Liaquat Jaoti and WAPDA Chairman Tariq Hameed were also present.

The prime minister asked the meeting participants to make a timetable to implement the steps for the privatisation of the power sector as soon as possible. “The prime minister wants the Pakistan Electric Power Regulatory Company (PEPCO) immediately detached so that the privatisation process could be expedited,” the official said.

The WB wants PEPCO to be detached from WAPDA and is shifting it from Lahore to Islamabad; the deadline for this action was December 30, 2004, but no progress has been made yet.

The prime minister has been informed that all power distribution companies had submitted new petitions with NEPRA for separate tariffs based on costs. Officials have also said that tariffs to be determined by NEPRA against the new petitions will be advised by the Water and Power Ministry after consulting the Finance Ministry by July 1. This means that financial autonomy will be delegated to the DisCos by July 1.

Government is committed to smooth energy supply: PM

ISLAMABAD: Prime Minister Shaukat Aziz has said that the government is committed to ensuring uninterrupted energy supply in order to sustain the present momentum of growth and to meet the country’s future needs. The prime minister was presiding over a meeting to review the progress of reforms and power sector deregulation on Monday. He said that the basic objective was to restructure and reform Water And Power Development Authority (WAPDA) in order to provide relief to the consumers and provide new industrial and commercial connections that would create more employment opportunities. Water and Power Minister Liaquat Ali Jatoi informed the Prime Minister that the Faisalabad Electric Supply Corporation (FESCO) and Jamshoro Energy Supply Corporation (JENCO) were ready for privatisation. WAPDA chairman and senior officials from the Water and Power Ministry attended the meeting. online

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