ISLAMABAD: The government has unveiled an attractive investment framework offering up to 20 percent returns and greater operational flexibility to attract buyers for the privatisation of three major power distribution companies (DISCOs) later this year.
Prime Minister’s Adviser on Privatisation, Muhammad Ali, said the government is restructuring the transaction model to ensure investor confidence while safeguarding consumer interests. The move is aimed at facilitating the successful privatisation of Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO), and Islamabad Electric Supply Company (IESCO) during October, November, and December 2026.
Speaking after a meeting of the Privatisation Commission Board, Ali said the commission has completed domestic investor outreach in seven major cities and is now expanding its marketing campaign internationally, targeting investors in Saudi Arabia, China, Türkiye, Qatar, Bahrain, Oman, and other Middle Eastern countries.
“We will incorporate investor-friendly conditions into the transaction structure before the bidding process begins. Without these reforms, privatisation will not be possible,” he said.
The government has set July 7 as the deadline for Expressions of Interest (EOIs) for FESCO, August 24 for GEPCO, and September 7 for IESCO. Bidding for the three companies will be conducted sequentially in the final quarter of 2026.
According to Muhammad Ali, investors have shown strong interest in Pakistan’s power sector but have sought long-term tariff visibility, freedom to buy and sell electricity, self-generation rights, and greater private-sector participation. While the government has ruled out dollar-denominated returns, it plans to offer 14–15 percent returns in rupees, with performance-based incentives that could increase profitability to 18–20 percent.
“The current tariff and business model is not attractive enough. It must evolve to encourage private investment and improve efficiency,” he noted.
The adviser said the uniform national electricity tariff would continue for now, but improved efficiency, lower losses, and better utilization of surplus generation capacity could eventually help reduce electricity prices for consumers.
In parallel, the government is also working on restructuring Hyderabad Electric Supply Company (HESCO) and Sukkur Electric Power Company (SEPCO), with plans to complete their privatisation by August-September 2027.
During the meeting, the Privatisation Commission Board approved the restructuring plan for FESCO, which will now be submitted to the Cabinet Committee on Privatisation (CCoP) for final approval.
The board also approved a consortium led by KPMG, along with Bridge Factor and other partners, as the highest-ranked bidder for appointment as financial adviser for the privatisation of the House Building Finance Company Limited (HBFCL).
Additionally, the board reviewed a proposed advisory agreement with the Asian Development Bank (ADB) regarding the outsourcing of operations at Islamabad International Airport under a long-term concession model. The initiative is expected to enhance operational efficiency, improve passenger services, and align airport operations with international standards.
The government views these transactions as key components of its broader strategy to attract private investment, improve service delivery, and reduce the financial burden of state-owned enterprises on the national exchequer.
Story by Khaleeq Kiani
