Business community has supported the proposal of Water and Power Ministry to give control of some power generation companies to private sector for a specified time in a bid to transform them into profit making entities.
Decision to improve efficiency
This positive suggestion is according to the wishes of private sector which has repeatedly claimed the ability to transform inefficient public sector organisations into profit making entities, said Mian Shahid while speaking at a forum.
Giving operational and maintenance control of four power generation companies (Gencos) to private sector for a period of 10 years may prove to be a turning point, he said adding that it will be a test of the skills of the private sector. Mian Shahid said that private sector’s focus on profit maximisation is what is needed today as the stress of public sector entities on other aspects of business has resulted in losses to the tune of billions. This decision, if implemented, can rationalise tariff, improve efficiency, reduce complaints, bring political meddling and overstaffing to an end which is a major reason for losses, said Shahid who is also Chief Executive of the Saudi Pak Insurance Company.
Per Unit cost of electricity to be reduced
At the occasion VP FPCCI Fazal Elahi said that such a move is imperative as it will reduce per unit cost of electricity if contractors are allowed to revamp organisational structures.
“This proposal should be approved immediately with a mechanism so that mistakes committed during the unsuccessful privatisation of KESC are not repeated,” said Elahi.
Chairman FPCCI Capital Office Hameed Akhtar Chadda said that the elimination of circular debt is the key without which no state-run enterprise can become profitable no matter who manages it.
He called for steps that can attract experienced and reputable individuals and companies in such a venture.
Transparency must be ensured
Samina Fazil, President, Islamabad Women’s Chamber of Commerce and Industry said that matters pertaining to investment, tariff adjustment and profits should be settled in front of the public eye to ensure transparency in any such deal. She said that if proven successful, the private sector can be entrusted to bring other organisations out of losses that can save around 500 billion rupees per annum.
Chairman FPCCI Standing Committee on Pharmaceuticals Tariq Mehmood said that such a move without giving full control to private sector may prove counterproductive.
According to reports, the Transmission and Distribution (T&D) losses of electricity were recorded at 19.3 billion units or 20.3 per cent of the total power generated was lost in last year alone. If calculated at an average per unit rate of 7.5 per unit, the total loss of revenue amounts to Rs145 billion. This points out to the level of incompetence of the concerned authorities.
The power crisis has severely affected the economy of Pakistan most importantly the industrial and manufacturing sectors. Since the private sector is the worst affected, it is expected that with this decision, the private sector would be able to take steps for increased efficiency of power generation and will help reduce significant losses to Genco’s in the long run by revamping organizational structures.
