Govt weighs political risk guarantees to attract buyers for Discos

Citing Dawn, Profit reported that the federal government is weighing political risk guarantees backed by multilateral agencies, plus steps to make regulation more predictable, to lure investors into the privatisation of power distribution companies (Discos). The move follows worries voiced by domestic and overseas bidders reviewing the initial group of Discos, including renegotiated independent power producer contracts and recent legal developments involving K-Electric. Prospective buyers want binding legal guarantees, clearer allocation of financial risk and licences lasting more than the present 20 years.

On Wednesday, Finance Minister Muhammad Aurangzeb chaired a steering committee meeting on power sector regulation, aimed at encouraging investment and private participation. The session coincided with a Sindh High Court stay order that suspended recent decisions by Nepra and its appellate tribunal on K-Electric's Multi-Year Tariff, which had effectively cut federal subsidies worth approximately Rs200 billion. After K-Electric filed a petition, the court froze the notifications in question and issued notices to respondents ahead of a hearing set for October 15.

Aurangzeb stressed, according to an official statement, the need for a regulatory framework able to keep pace with technology, shifting electricity demand and a wider move to solar power. The committee also went through old capacity commitments, service standards, investment bottlenecks and efficiency rewards. Aurangzeb wants a market design that rewards efficiency, improves service and opens more room for private investment.