KARACHI, Feb 7: Karachi Electric Supply Corporation’s (KESC) losses will reach Rs92 billion by the time of its privatization that will be borne by the government to attract more buyers for the entity.

This was stated by the Federal Privatization Minister Altaf M. Saleem while addressing the members and management committee of the Karachi Chamber of Commerce and Industry (KCCI) here on Thursday.

He said the government would sell 75 per cent shares of KESC and would like that the local investors buy some 10 to 15 per cent shares so the rest could be offered to foreigners. He said that the appropriate measures have been taken to cover up the security risks involved in sell-off of public sector entities to foreigners.

He maintained that the government is looking for such a buyer who could invest $400 to 450 million in the infrastructure of KESC to improve distribution and control losses. The new owner of KESC will have to bear losses in the first two to three years.

He said the buyers will have to ensure that the tariff not raised and profits generated through controlling the losses and power theft.

Altaf Saleem said the privatization is aimed at removing subsidies and incentives so that level-playing field could be provided to every sector.

He said the general impression that the privatization process was initiated to generate funds to retire foreign debts, was wrong as it is a reformed programme, started in 1991. He said that in the first five to six year, cement and ghee units were privatized, which saved Rs35 billion per annum the government was injecting in these units as subsidy to compensate their losses.

He said before privatizing any unit, the government inducts private sector people in its Board of Directors so that all decisions could be made on commercial basis.

He said in the past, government used to inject Rs30 billion every year in the banks to save them from collapse due to non-performing loans. He said NPLs were the result of financing the SRO based industry, and were the main reason for high lending rates.

He said the government has decided to privatize the banks to minimize its liabilities which helped in bringing down the lending rates. The low foreign reserves were another reason of reluctance of the foreign investors who feared that Pakistan would not have enough reserves to let them repatriate their profits in dollars.

Talking about the gas sector he said world over the bulk users get gas on cheaper rates but in Pakistan domestic users were subsidized and bulk users were made to pay higher. This has to be rationalized, he said, adding, subsidy on domestic use will be withdrawn and bulk users will be given incentives in this regard to make the manufacturing industry cost-effective.

He said on the petroleum sector, government used to spend Rs15 billion per annum for supplying petroleum products throughout the country at the same level due to which the consumption of petrol increased in Peshawar as compared to Karachi. Now the country has been divided into 29 depots and government only bears cost of transportation up to these depots saving around Rs5 billion transportation charges.

Earlier, President of Chamber, A.Q. Khalil presented the address of welcome.—APP