Rs911b assets transferred in DISCO restructuring

Express Tribune reports that the Cabinet Committee on Privatisation has approved a plan to transfer Rs911 billion in assets from three power distributors to new buyers, against Rs648 billion in liabilities. The scheme covers FESCO, GEPCO and IESCO, and the approval came on the committee's third attempt. However, the arrangement appears to conflict with an IMF condition that prohibits offsetting arrears unless an independent audit confirms them.

Advisor to the Prime Minister on Privatisation Muhammad Ali said the assets were valued at market value and the government would keep ownership of all land held by the three companies. Selected assets and pension liabilities of already retired employees will move into a state-owned special purpose vehicle, while current staff retirement benefits stay with the distributors. Buyers would take net equity of Rs263 billion, while the federal government keeps Rs257 billion in assets, mostly land.

Asset transfers were set at Rs290.5 billion for FESCO, Rs252 billion for GEPCO and Rs368 billion for IESCO. Ali added that land would be leased to buyers at existing rates so tariffs would not rise to recover the extra lease costs. According to IMF documents, the fund has barred offsetting liabilities until receivables are audited, and a CCoP participant said external auditors would be used to meet the condition.