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ADB asks govt to pick up KESC liabilities

ASIF FAROOQI

ISLAMABAD: Asian Development Bank has demanded of the government to pick up the liabilities of Karachi Electric Supply Company to make it a viable unit for expedient privatisation, official sources said.

The proposal came up for discussion during a round of talks between visiting ADB delegation and the concerned government representatives at the Finance Ministry which focused on the privatisation of KESC.

Sadiq Zaidi headed the ADB delegation in the talks whereas Secretary General Finance Moin Afzal and Secretary Water and Power Muhammed Zafarullah represented the Government of Pakistan.

Official sources said the ADB mission stressed upon the government to expedite the privatisation of the state owned entities in the power sector, especially that of the KESC. For this purpose, the mission proposed that the government should take over the KESC liabilities of more than Rs 33 billion so that the sell off process could be instantly geared up.

Besides, the ADB officials also demanded that to present the company in a better financial health, the government may bear the six billion deficit which the company has faced due to reduction of power tariff and increase in the oil prices during last one month or so .

"It is essential for the sake of the successful privatisation process that the financial health of the unit looks great," the ADB officials were quoted as telling the Pakistani delegation during the talks.

The ADB mission was briefed on the steps the government has already taken to fulfil its commitment on the swift privatisation of the power sector entities. Financial and administrative restructuring plans were thoroughly debated as the mission raised certain technical questions on both the aspects of the restructuring strategy.

The mission was informed that the financial position of the company was not as bad as it is today some six months back but downward tariff and upward fuel adjustments caused sevre losses to the company.

Sources said despite insistence by the donor institutions, the deadline for KESC privatisation continues to slip away. The government, during the discussion on Monday came out with a new extended date by which the privatisation process has been claimed to be completed. According to the sources the ADB officials were told that the company couldn't be finally put on sale before June 2000.

This is the third extension in the proposed deadline for KESC privatisation during the last six months. Privatisation Commission had initially announced that the company would be put on sale by September 1999. The date then was extended to November last and now it is to be June 2000.

The ADB mission is likely to call on the Finance Minister Shaukat Aziz to discuss the proposals which were taken up with the Pakistani authorities on Monday.