PRIME MINISTER Shehbaz Sharif’s plan to transfer the 10 public-sector Discos from the centre to the provinces was ostensibly aimed at offloading their significant losses to the latter. Another reason could be the belief that the provinces are better placed to manage and fix these cash-guzzlers due to their close proximity to the power distributors and consumers. However, the idea, which comes as a surprise given the earlier decision of the Special Investment Facilitation Council to turn over these companies to the private sector through ‘long-term concessions’, may well prove a non-starter and thus a waste of time. No province is likely to want them as it would put a very heavy burden on their budgets. Balochistan and KP neither have the financial muscle nor the capacity to manage them. Then, there are other issues such as the application of a countrywide uniform consumer tariff and subsidies, in addition to legal complexities that would have to be tackled before any progress on this idea can be made. It was for these reasons that the previous three attempts to transfer the Discos to the provinces failed.

There are no two opinions about the financial burden the Discos are putting on the deficit-ridden federal budget and the capacity constraints of the centre in properly managing these mammoth organisations. It would be a big mistake to expect the provinces to transform them into functional, profitable businesses, even if they are able to reduce power theft and improve bill recoveries. Also, the authorities need to eliminate the annual losses of nearly $1bn that these companies cause to the exchequer rather than shift the liability to the provinces. Given the long history of resistance by vested interests to the privatisation of these companies, it is not surprising that many look at this move with suspicion. It may not be a derailment of the power sector reforms agenda needed to fix the electricity distribution system, but repeating the mistake is a sheer waste of time. With the country in need of quick decisions to stabilise the economy, the new government has little time at its disposal to indulge in such futile experiments. It is time Mr Sharif decided to stick to the power-sector privatisation plan rather than spend his energy on ideas that are likely to fail.

Published in Dawn, March 10th, 2024