KARACHI: Pakistan has signed a financial advisory agreement with a consortium led by Dubai-based Alvarez & Marsal Middle East Limited to help privatize three major power distribution companies (DISCOs), the Privatization Commission said on Tuesday.

The agreement is part of the government’s broader privatization drive to reform the power sector that has been plagued by circular debt, operational inefficiencies and power theft.

The government has been working to divest state-run power companies as part of its wider economic reform agenda, recommended under its $7 billion loan program with the International Monetary Fund.

“This strategic initiative aligns with the government’s commitment to improving efficiency, reducing losses and ensuring long-term sustainability in the power distribution sector,” the Privatization Commission said in a statement.

Alvarez & Marsal Middle East Limited, a professional services firm specializing in business performance improvement and turnaround management, will provide financial advisory services for the privatization of Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO) and Islamabad Electric Supply Company (IESCO).

It will conduct due diligence, market analysis, investor outreach and transaction structuring to facilitate private sector participation in the bidding process.

Pakistan has long struggled with power sector challenges, with state-run distribution companies suffering massive financial losses due to inefficiencies, revenue shortfalls and delays in tariff adjustments.

The signing ceremony was attended by senior officials from the Privatization Commission and representatives of the A&M-led consortium.