Govt's plan to transfer Rs911 billion in assets for three Discos restructuring may breach IMF audit condition: report

Profit by Pakistan Today, citing The Express Tribune, reports that the government's proposal to hand over Rs911 billion in assets to fresh buyers, netted against Rs648 billion in liabilities, may run counter to an IMF requirement. Under that condition, arrears cannot be offset until an independent audit has confirmed them. The Cabinet Committee on Privatisation approved the restructuring of three distribution companies, FESCO, GEPCO and IESCO, on Monday.

Under the scheme, selected assets, including every land parcel, and some liabilities, such as post-retirement dues owed to people already retired, will move into a government-owned special purpose vehicle, while current staff benefits stay with the companies. Privatisation adviser Muhammad Ali described the asset values as market value and said the government keeps all land. He also said inter-governmental receivables and payables would be netted off to settle what Pakistan is owed, calling the plan fiscally neutral.

On the aggregate figures, buyers would acquire Rs911 billion of assets and assume Rs648 billion of obligations, leaving them Rs263 billion of net equity, while the state keeps Rs257 billion of assets, largely land. Company-level figures show FESCO at Rs290.5 billion of assets against Rs226.5 billion of liabilities, GEPCO at Rs252 billion against Rs169 billion and IESCO at Rs368 billion against Rs256 billion. Distribution losses last fiscal year were 8% at FESCO, 10% at GEPCO and 7.9% at IESCO.