KARACHI: The caretaker government has come up with a novel plan to deal with the issues of circular debt and privatisation simultaneously, as sources say the power generation units at Nandipur and Guddu won’t be handed over to the private sector as per the original proposal.
The sources say instead of going ahead with the planned privatisation of Nandipur Power Plant and Guddu Power Plant, the government has decided to hand over the controlling stakes of these state-owned enterprises (SOEs) to the Pakistan State Oil (PSO) – the transactions involving Rs100 billion.
Circular debt is the reason behind this proposal as the two SOEs have to pay Rs100bn to the gas marketing companies – Sui Northern and Sui Southern.
Hence, the PSO – a profitmaking state-run entity – will buy the shares worth Rs100bn, a move that would help dealing with the circular debt amount these two units have to pay.
As a result, the gas-fired power plants are to be removed from the list prepared by the Privatisation Commission. However, the execution of this plan is subjected to federal cabinet’s approval.
The latest news emerged after Caretaker Privatisation Minister Fawad Hassan Fawad last week said that all the legal formalities had been completed for the transaction of Pakistan International Airlines (PIA).
He added that the caretaker setup was carrying out the privatisation under the constitutional amendments enacted by the last elected government to arrest further deterioration of economy.
The proposal about the two power plants comes as Pakistan is venturing into the much-delayed privatisation plan amid the prevailing economic crisis and the pressure exerted by International Monetary Fund (IMF).
Reducing budget deficit is the ultimate goal behind the move as the lossmaking SOEs are proving to be a huge burden to national exchequer and reached a status where it is no more feasible to bail out these entities thanks to the rupee devaluation – making everything expensive not only for ordinary citizens but also the state.
