Pakistan’s DISCO privatisation programme has taken another significant step as the Privatisation Commission Board recommended restructuring plans for three major state-owned electricity distribution companies. The proposal covers Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO), and Islamabad Electric Supply Company (IESCO). The move is part of the government’s broader strategy to improve efficiency, attract private investment, and modernize the country’s power sector.
Government Advances Power Sector Reforms
The Privatisation Commission Board approved recommendations for restructuring the first batch of electricity distribution companies before presenting them to the Cabinet Committee on Privatisation (CCoP). The meeting was chaired by Adviser to the Prime Minister on Privatisation and Chairman of the Privatisation Commission, Muhammad Ali.
The restructuring plans are based on audited financial statements for the period ending March 31, 2026. Officials believe that restructuring these companies before privatization will make them more attractive to investors while ensuring greater value for the government.
The latest development reflects the government’s continued commitment to implementing DISCO privatisation through a transparent and competitive process.
Special Purpose Vehicle to Support Privatization
A major feature of the restructuring plan is the creation of a government-owned Special Purpose Vehicle (SPV).
The SPV will separate selected assets and liabilities from FESCO, GEPCO, and IESCO before the privatization process begins. This approach is intended to create a cleaner financial structure that is easier for investors to evaluate.
By transferring certain liabilities and restructuring company assets, the government hopes to improve commercial viability and increase investor confidence.
This model has been used in various countries to simplify large privatization transactions and reduce financial risks for potential buyers.
Why the Government Is Privatizing DISCOs
Pakistan’s electricity distribution companies have faced operational and financial challenges for many years.
Some of the major issues include:
- High transmission and distribution losses.
- Delays in bill recovery.
- Rising operational costs.
- Infrastructure modernization needs.
- Financial pressure on the national power sector.
Through DISCO privatisation, the government aims to introduce private-sector expertise, improve operational performance, encourage investment in infrastructure, and enhance customer service.
Officials believe that private management can introduce greater accountability and efficiency while reducing the financial burden on the public sector.
Strong Investor Interest Reported
The Privatisation Commission informed the board that both domestic and international investors have shown considerable interest in acquiring stakes in the three distribution companies.
The schedule for submitting Expressions of Interest (EOIs) has already been announced:
- FESCO: August 7
- GEPCO: August 21
- IESCO: September 7
The positive response from investors suggests growing confidence in Pakistan’s ongoing economic reforms and the future potential of the country’s energy sector.
Competition among qualified investors could also help maximize the value received by the government during the privatization process.
Airport Outsourcing Also Moves Ahead
Alongside electricity sector reforms, the Privatisation Commission also advanced plans for outsourcing major airports.
The board established two Transaction Committees to supervise the outsourcing of Islamabad, Lahore, and Karachi airports.
The Asian Development Bank (ADB) has been appointed as the financial adviser for Islamabad International Airport. Meanwhile, the selection process for financial advisers for Lahore and Karachi airports is currently underway.
These initiatives demonstrate that the government is pursuing reforms across multiple sectors to improve operational efficiency and attract long-term private investment.
Focus on Transparency and Accountability
The Privatisation Commission also approved independent transaction audits to strengthen transparency throughout the privatization programme.
RSM Avais Hyder Liaquat Nauman, Chartered Accountants, has been appointed to conduct transaction-specific audits of privatization deals completed between the financial years 2024-25 and 2026-27.
In addition, BDO Ebrahim & Co. will continue auditing the financial statements of the Privatisation Commission for multiple financial years after being selected through a competitive bidding process.
Independent auditing helps ensure accountability and strengthens public confidence in large government transactions.
Potential Benefits for the Power Sector
If successfully implemented, DISCO privatisation could bring several long-term benefits to Pakistan’s electricity sector.
Private investment may help modernize aging infrastructure, reduce electricity losses, improve billing systems, and enhance customer support services. Increased operational efficiency could also contribute to a more financially stable power sector.
Improved governance and commercial management may encourage greater investment in technology, digital services, and network expansion, ultimately benefiting consumers through better service delivery.
However, experts also emphasize the importance of maintaining effective regulatory oversight to ensure that service quality and consumer interests remain protected after privatization.
Challenges Ahead
Although investor interest is encouraging, privatization remains a complex process.
The government will need to carefully manage regulatory approvals, employee concerns, asset transfers, and legal requirements throughout the restructuring process.
Maintaining transparency and ensuring fair competition among investors will be essential for achieving successful outcomes.
Clear communication with stakeholders and proper implementation of regulatory safeguards will also play a key role in maintaining public confidence.
The government’s latest decision marks another important milestone in Pakistan’s ongoing DISCO privatisation programme. By restructuring FESCO, GEPCO, and IESCO before offering them to investors, authorities hope to create commercially stronger companies capable of attracting both local and international investment.
Combined with reforms in airport outsourcing and stronger auditing mechanisms, these initiatives reflect a broader effort to modernize public sector enterprises, improve efficiency, and encourage sustainable economic growth. As the privatization process moves forward, its success will depend on transparent implementation, investor confidence, and continued regulatory oversight to ensure long-term benefits for both the economy and electricity consumers.
