ISLAMABAD: The government has decided to privatise two of Pakistan’s largest area-wise power distribution companies, Lahore Electric Supply Company (LESCO) and Multan Electric Power Company (MEPCO), in their existing form instead of splitting them into smaller entities.
The decision was taken after a Technical Committee constituted by the Privatisation Commission (PC) reviewed the feasibility of bifurcating the two companies into two or three separate distribution companies before their privatisation.
According to officials familiar with the matter, the committee concluded that both LESCO and MEPCO should be privatised in their current structures, as any restructuring or bifurcation would likely delay the privatisation process.
The committee was headed by Sajid Akram, Advisor (Power) at the Privatisation Commission, and included representatives from the Power Division, National Electric Power Regulatory Authority (NEPRA) and Power Planning and Monitoring Company (PPMC).
It was tasked with examining the strategic advantages and disadvantages of splitting the companies in light of the National Electricity Plan, Power Policy and the ongoing government privatisation programme.
Meanwhile, the Privatisation Commission has decided to appoint a Financial Adviser to provide advisory services for private-sector participation in LESCO and MEPCO.
The commission has invited interested firms and consortiums with relevant transaction experience to participate in the process. The Request for Proposal includes the terms of reference, evaluation criteria and a draft Financial Adviser Services Agreement.
The decision is significant given the scale of both distribution companies.
MEPCO, incorporated in 1998, is the country’s largest distribution company by consumer base. It serves approximately 8.76 million consumers across 13 administrative districts of southern Punjab.
Its network comprises more than 82,000 kilometres of distribution lines and over 780 grid stations, covering areas bordering three provinces and several other distribution companies.
LESCO, which began operations as a public limited company in July 1998, serves approximately 7.05 million consumers in Lahore and adjoining districts, including Kasur, Sheikhupura, Nankana Sahib and Okara.
The company operates through eight circles headed by Superintending Engineers and 41 divisions managed by Executive Engineers.
Both LESCO and MEPCO have faced persistent operational challenges, particularly regarding electricity theft, line losses and recovery rates. Their performance has remained weaker than that of some other Punjab-based DISCOs.
LESCO has been pursuing system modernisation through initiatives including Advanced Metering Infrastructure (AMI), smart metering and digital billing, with a target of converting its consumer base to smart meters by 2029.
However, shortages of transformers and meters have continued to affect new connections and replacement of faulty equipment.
MEPCO has similarly been working on grid modernisation, AMI deployment and digital billing to improve transparency, recoveries and customer services.
Audits for FY2024-25 showed that the overall performance of both companies remained unsatisfactory, highlighting the operational challenges that will need to be addressed during the privatisation process.
By retaining LESCO and MEPCO in their existing form, the government expects to avoid the additional administrative, regulatory and financial complications associated with bifurcation.
The move could therefore allow the Privatisation Commission to proceed more quickly with the transaction process while leaving the companies’ existing operational structures intact.
Story by Mushtaq Ghumman
