KARACHI: Pakistan on Wednesday signaled potential reforms to electricity tariff structures and the business model of state-run power distributors as Islamabad seeks to attract investors for three major distribution companies being offered for privatization under an International Monetary Fund-backed reform program.
On Tuesday, the government invited local and international investors to bid for stakes in Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO) and Islamabad Electric Supply Company (IESCO), offering between 51 percent and 100 percent shareholding along with management control in each entity.
Pakistan has been pursuing structural reforms in the power sector under a $7 billion IMF stabilization program aimed at reducing losses, improving bill recoveries and tackling mounting circular debt that has long strained public finances and undermined the country’s energy sector.
The three distribution companies collectively serve more than 14 million consumers across major industrial, commercial and urban centers in Punjab province and the Islamabad region. Pakistan’s power distribution firms have for years struggled with electricity theft, transmission losses, weak recoveries and operational inefficiencies that contribute heavily to the country’s chronic circular debt crisis.
“The Privatization Commission will engage with potential investors and power sector stakeholders to refine the existing DISCO tariff structure, MYT regime, business model, and framework for competitive suppliers,” Muhammad Ali, adviser to the prime minister on privatization and chairman of the Privatization Commission, said in a statement issued on Wednesday.
“The proposed reforms aim to create a performance and efficiency based return regime while enabling private sector buyers to leverage DISCO infrastructure and customer base for additional business opportunities ... These measures are expected to support faster and more effective private sector participation in Pakistan’s power supply business.”
The government last week approved the transaction structure for the privatization of the three companies, part of a broader privatization push that follows the sale of Pakistan International Airlines (PIA) earlier this year.
On Tuesday, the Privatization Commission formally invited Expressions of Interest (EOIs) for the three firms, describing them as “strategically important assets within Pakistan’s energy landscape.”
According to the commission, separate submissions will be required for each company, with deadlines set for July 7 for FESCO, Aug. 6 for GEPCO and Sept. 7 for IESCO.
The government says the privatization initiative aims to improve service delivery, modernize infrastructure and encourage greater private-sector participation in the electricity market.
