ISLAMABAD: Pakistan’s Privatization Commission said on Thursday it has appointed an international firm, Raiffeisen Investment, as an adviser for the privatization of a second batch of power distribution companies (DISCOs), amid the country’s drive to privatize loss-making, state-owned enterprises.
The Privatization Commission signed a Financial Advisory Services Agreement (FASA) with Raiffeisen Investment, a leading advisory firm in Central and Eastern Europe, in Islamabad for private sector participation in privatization of the Hyderabad Electric Supply Company (HESCO) and Sukkur Electric Power Company (SEPCO).
It said Raiffeisen Investment was the top-ranked financial adviser, selected through a competitive process from among the financial advisory firms that participated in the bidding. The signing will take forward the privatization of the two power distribution companies.
Under the agreement, Raiffeisen Investment will serve as the sell-side financial adviser and will comprehensive due diligence, market sounding and engagement with potential investors, according to the Privatization Commission.
“The FA (financial adviser) will also support the Privatization Commission in structuring and marketing the transactions, and in conducting a transparent and competitive bidding process, in line with the government’s privatization framework and applicable rules,” the commission said.
Pakistan’s government has been attempting to privatize the loss-making entities to raise funds and reform state-owned enterprises as envisaged under a $7 billion International Monetary Fund (IMF) program secured last year.
DISCOs, which handle billing, recoveries and grid maintenance, have long suffered from corruption and political interference. According to Finance Minister Muhammad Aurangzeb, nearly 90 percent of DISCO boards are now chaired by private-sector professionals to ensure better governance and gradually improve their recoveries.
“Privatization of the first batch of DISCOs: Islamabad Electric Supply Company (IESCO), Gujranwala Electric Power Company (GEPCO), and Faisalabad Electric Supply Company (FESCO), is already underway,” the Privatization Commission said.
“The inclusion of HESCO and SEPCO in the second batch reflects the government’s continued commitment to improving service delivery, efficiency, and financial sustainability in the power distribution sector through private sector participation.”
The Pakistani government, which owns or controls much of the power infrastructure, is grappling with ballooning “circular debt,” or unpaid bills and subsidies, that has choked the power sector and weighed on the economy.
The liquidity crunch has disrupted supply, discouraged investment and added to fiscal pressure, making it a key focus under Pakistan’s IMF program.
Adviser to the Prime Minister on Privatization Muhammad Ali expressed strong confidence in the capability and expertise of Raiffeisen Investment to support the commission in achieving optimal outcomes for these transactions.
“The engagement of an experienced, top-ranked FA is critical to ensuring value maximization, investor confidence, and a credible privatization process,” he was quoted as saying by the Privatization Commission.
