PESHAWAR: The Khyber Pakhtunkhwa caretaker government has set the precondition of the handover of all federally-owned hydropower stations in the province for the takeover of the Peshawar Electric Supply Company.

Earlier this month, Prime Minister Shahbaz Sharif formed a 13 members committee to look into the matter of the handover of power distribution companies (Discos) to provinces.

The committee is headed by the defence minister.

Sources told Dawn that though other provinces had lapped up the idea of the provincial ownership of Discos, the KP government had adopted a circumspect view of the federal government’s offer.

Seeks control of centre-owned hydropower units in province

They said since the Pesco had huge line losses, the Disco takeover would further burden the cash-starved province.

An official said requesting anonymity that KP had conveyed to the centre that in light of the poor financial and administrative conditions of Discos, the federal government had proposed to shift their financial and administrative responsibilities to the provinces – a move that would shift Pesco’s burden to the KP government.

He said currently, Pesco faced a huge shortfall of Rs200 billion per annum along with Rs30 billion per annum in receivables.

“At present, the Pesco enjoys a uniform national tariff due to tariff differential subsidy, which can be at risk if the existing structure of the power sector is altered. In addition, the administrative structure of the KP government is under severe stress due to the current law and order situation and militancy together with the low economic and social indicators,” he said.

The official said that it won’t be possible for the province to take over Pesco.

He, however, said such a proposal could be considered if power generation was handed over to the province along with the income generated by power production.

“This will entail the handing over of all federally-owned hydropower stations to the province,” he said.

The official said the provincial government had asked the federal government to place the report of the out-of-box solutions committee before the Council of Common Interest in its next meeting.

He added that KP had asked the centre to set up a ministerial level committee to deliberate on the subject of the provincialisation of Discos to accommodate the viewpoints of the provinces.

On March 17, the prime minister constituted a committee to look into the matter of the transfer of distribution companies to the provincial governments. The panel will examine the current constitutional framework for transfer of Discos from the federal government to the respective provincial government.

Besides, it will also chalk out a list of legal requirements to be complied if needed and propose a legal framework for the purpose.

In addition, the committee will examine the requirements of the National Electric Power Regulatory Authority with regard to the change of ownership with regard to the change of ownership of its licensees (Discos) and the steps involved, examination of regulatory requirements and other regulators, including the Securities and Exchange Commission of Pakistan, State Bank of Pakistan and Competition Commission of Pakistan, and outline the compliance required therein for transfer of ownership of equity.

Sources said the committee was slated to meet on March 24 with KP energy and finance minister Himayatullah Khan to represent the province in the meeting.

The Nepra’s Performance Evaluation Report said for power distribution companies in the financial year 2021-22, the Pesco’s annual line losses totalled Rs64 billion, the highest in the country.

Published in Dawn, March 23rd, 2023