# GENCO Pension Liabilities Shifted to DISCOs as ECC Rejects NEPRA Proposal
**ISLAMABAD:** The government has rejected a proposal by the National Electric Power Regulatory Authority (NEPRA) to use proceeds from the sale of GENCO assets to finance pensions of employees of the closed power plants, deciding instead to shift the pension liabilities to distribution companies (DISCOs).
According to well-informed sources, the Economic Coordination Committee (ECC) approved a proposal of the Power Division under which GENCO pensioners would be adjusted in DISCOs responsible for disbursing their pensions. The decision was subsequently ratified by the Federal Cabinet.
The issue emerged following the closure of GENCO power plants and the discontinuation of their Capacity Purchase Price (CPP), which had previously provided funds for employee salaries and pensions.
In September 2020, the Cabinet Committee on Energy (CCoE) had directed the immediate closure of GENCO plants with a combined capacity of 1,796 MW and the phased closure of another 2,475 MW by September 2022. While the first batch of plants was subsequently shut down, the remaining plants were also closed in 2024, triggering a fresh issue of surplus employees and pension liabilities.
Following the latest closures, a committee constituted under the Prime Minister’s Office decided in February 2025 that surplus GENCO employees would be absorbed into DISCOs against existing vacancies. Subsequently, **3,499 GENCO employees were adjusted in various DISCOs**.
The Power Division informed the government that **5,106 GENCO pensioners** were currently involved in the pension arrangements—4,990 already receiving pensions through various DISCOs and 116 receiving payments directly from GENCOs.
Under the approved arrangement, these 5,106 pensioners will be formally adjusted in the relevant DISCOs. In addition, pensions of the 3,499 GENCO employees already absorbed into DISCOs will be paid by the respective DISCOs when they retire under the applicable rules.
The DISCOs will then seek adjustment of the pension costs through their tariffs from NEPRA.
The Finance Division had supported the proposal in principle but asked for details regarding GENCO assets, their disposal proceeds and the possibility of using those proceeds for voluntary separation schemes or to offset pension liabilities.
NEPRA, meanwhile, recommended that proceeds from the disposal of GENCO assets be transferred to DISCOs and placed in a separate pension fund. Income generated by the fund could then be used to offset pension liabilities and minimise the impact on consumers.
However, the Power Division argued that NEPRA’s proposal could create complications because proceeds from the sale of GENCO assets are limited, while pension liabilities are long-term obligations.
The Power Division further maintained that the pension costs were already being recovered through tariffs and that the approved arrangement would only change the entity responsible for making pension payments, rather than create an additional burden on consumers.
GENCO Holding Company Limited (GHCL) also provided details of the proceeds generated from the disposal of GENCO plants and their proposed utilisation, while confirming that the transfer of pensioners to DISCOs would not result in an additional consumer tariff burden.
After detailed consideration, the **ECC approved the Power Division’s proposal**, rejecting the approach recommended by NEPRA to establish a separate pension fund using GENCO asset-sale proceeds. The decision was later ratified by the Federal Cabinet.
Story by Mushtaq Ghumman
