ISLAMABAD, Jan 2: The government has offered 56 per cent shares and management control of Faisalabad Electric Supply Company (Fesco) to the strategic investor as part of power sector reforms programme.
The Privatization Commission has asked interested parties from the private sector to submit their expressions of interest (EoIs) so that they could be provided with requests for statement of qualification (RSOQs). Last date for the submissions of RSOQs would be February 15.
This is the second major power sector unit being put to sale after unbundling of Water and Power Development Authority in 1998 under donor-funded power sector reforms. International Finance Corporation (IFC) is currently acting as financial adviser for the privatization of Fesco.
Fesco is one of the nine electric distribution companies created from the unbundling of the power wing of Wapda. The company was incorporated in 1998 as public limited company and providing electricity to around 1.8 million consumers in the central Punjab area.
Two other units so far brought on the sale counter included Karachi Electric Supply Corporation (KESC) and Peshawar Electric Supply Company (Pesco). The response from the investors towards KESC has been very poor as only two foreign investors submitted their EoIs but one of them later backed out while offer from the only remaining bidder was not worth consideration by the government.
The government is required under the World Bank loans to complete the privatization of at least three power sector units before June 2003. Fesco would be the first unit to meet that target. This would be followed by Pesco and then Jamshoro Power Generation Company (Genco-1).
As such the privatization of KESC has once again been put off indefinitely, although a very lucrative 7-year tariff formula has been introduced to improve KESC’s financial health.
The PC had also invited parties for appointment as financial advisors to assist the government in privatizing Pesco, another fully owned government company formed as a result of corporatization of Wapda.
Pesco was incorporated as a public limited company under Pakistan Companies Ordinance 1984 in September 1998 and started commercial operation on March 1, 1999.
Eight companies had submitted EOIs to become financial adviser (FA) on privatization of Pesco. These included Aqeel Karim Dhedhi Securities Ltd, BNA Capital Management, Faysal Bank Limited, Global Securities Ltd, Khadim Ali Shah Bukhari and Co, SG Conseil Pays Emergent, Trust Investment Bank Limited and Union Bank Limited/AMZ Securities.
Five of them were able to submit their technical and financial proposals for prequalification which include Faysal Bank, Khadim Ali Shah Bukhari and Co, SG Conseil Pays Emergent, Trust Investment Bank Limited and Union Bank/AMZ securities.
This is for the first time that loss-making power sector units are being put to sale. In 1995-96, the then People’s Party government had sold the most profitable power sector unit but the transaction remained under criticism for long and was later partly reversed.