DISCOs buyers eye dollar returns

Interested buyers of the three DISCOs being privatised have listed demands, officials familiar with the talks said. They want returns on their investment in foreign currency, sovereign guarantees that deals will not be reopened later, and relief from buying costly electricity. Officials said profit payments in US dollars and exempting buyers from IPP purchases are unlikely to be approved, given their effects on consumers and the economy. The first phase covers Faisalabad, Gujranwala and Islamabad, and about 12 investors, four of them foreign, have shown interest.

The Express Tribune reported that several demands reflect doubts about the government's record on past commercial deals, the courts and the power regulator. Investors also want a 7 to 10-year control period instead of the five-year tariff period, which they consider too short for long-term investment. They also want uniform tariffs replaced with performance and efficiency-based ones, since a single price currently applies to profitable and loss-making consumers.

Prime Minister Shehbaz Sharif has been briefed and has asked the Privatisation Commission to devise a transparent, rule-based post-privatisation regime. Officials indicated the government is prepared to respond to some legitimate investor worries, chiefly those tied to how the market will operate once the companies are privatised. Separately, debt and liabilities of public sector enterprises rose 8.7% last fiscal year to Rs3.11 trillion, up Rs249 billion, the central bank said.