25 June 2004	Friday	06 Jamadi-ul-Awwal 1425

ISLAMABAD, June 24: The government is finalizing an "action plan" to cut the huge losses of the power sector by attracting foreign investment. "This action plan is likely to be completed within two months after which a Financial Recovery Plan (FRP) for each power company will be prepared with a view to drastically cutting annual losses of billions of rupees of the power sector," said Secretary of Finance Nawid Ahsan.

Talking to Dawn he said that currently a World Bank energy sector mission headed by Mr Alexander was visiting Pakistan to assess the financial requirements of the action plan.

"I have met Mr Alexander and discussed with him a number of important issues including the World Bank's assistance, the size of which has not so far been determined," he said.

The mission has also reportedly held a meeting with Minister for Water and Power Aftab Sherpao on Thursday and discussed with him issues relating to the energy sector.

Responding to a question, the secretary of finance said the World Bank, which had earlier provided roughly $330 million for the restructuring of the power sector, could provide a similar or even larger funding for achieving the objectives of the proposed action plan.

The purpose, he said, was to unbundle the state sector power companies so as to have their eventual corporatization. He said that a decision has been taken to induct professional management's in WAPDA, KESC and other state sector power utilities in order to remove their losses and make them financially viable.

Mr Ahsan said that the government had no option but to provide over Rs60 billion subsidy to WAPDA and KESC in the budget for 2004-05 to help meet their shortfalls. To another question, he said that as soon as National Electric Power Regulatory Authority (NEPRA) finalized the "determination of tariff", the financial recovery plan for each power company would be prepared.

However, informed sources said that the visiting World Bank's mission has expressed its concern over the growing losses of WAPDA and KESC. It regretted over the reports that the line and distribution losses of WAPDA and KESC were still 24 per cent and 38 per cent respectively and that the issue needed to be taken seriously by the government.

According to the World Bank, while the government had taken a number of steps to promote private investment in the power sector, the desired goal to ensure the development of the sector without recourse to the GOP budget, except for hydro-electric development and possible transmission, was nowhere in sight.