ISLAMABAD: The privatisation of Pakistan Disco made the first move towards implementation on Tuesday, as the privatisation commission officially invited expressions of interest from domestic and foreign investors regarding the privatisation of three of the most profitable electricity distributors in the country, a process which was expected to be completed within five years of the formation of these entities in 1998 but came twenty-eight years late.
The Faisalabad Electric Supply Company, the Gujranwala Electric Power Company, and the Islamabad Electric Supply Company are currently the first three DisCos that have been made available to private investors due to the fact that they are the most lucrative acquisition targets amongst the eleven DisCos which were formed by splitting the Water and Power Development Authority.
Shareholding from 51% to 100% with Total Management Control
The structure of the Pakistan Disco privatisation deals ensures that investors have true commercial freedom rather than being part of a minority shareholding in a government-owned company. Investors can purchase from 51% to 100% of shareholding in the three distribution companies, as well as total management control of any stake exceeding the minimum requirement.
This is an important aspect which holds great commercial importance. Investors who have taken the majority stake without having operational control have shown poor performance in privatisation cases related to utilities in the emerging markets. It is further emphasized by the fact that Pakistan’s experience with privatisation supports this point. Through this aspect of management control, it is clear that the government wants the change which has not been brought about through the decades of public management.
Over 14 Million Consumers in the Economic Core of Punjab
The Pakistan Disco privatization involves three firms whose operations cover over 14 million consumers in economically vital areas in Pakistan. The Fesco firm serves the area of Faisalabad and the industrial complexes in its vicinity, which include the core textile manufacturing region that is responsible for generating a large proportion of Pakistan’s export earnings.
The Gepco provides electricity to Gujranwala, which is yet another industrial city with its production facilities in steel, ceramic, and light engineering industries as well as consumer population from commerce and residences. Iesco provides electricity to Islamabad, Rawalpindi, and Azad Jammu and Kashmir region, which has consumers from the federal capital as well as large institutional demands from governments and businesses.
The IMF Conditions Trigger the Breakthrough
It is clear from the onset that the long awaited initiation of the privatization of Pakistan Disco was triggered by the structural reforms that have been set by Pakistan’s IMF program. This is evident since the Privatization Commission openly recognized that the structural reforms required by the IMF put emphasis on the need for privatization of the power distribution companies.
It is this pressure from the IMF that gives the political protection that past governments have not had in the face of opposition from public sector trade unions and existing management, who have a vested interest in the government controlling hiring and purchasing for the distribution companies.
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Deadlines for Each Disco Separately
The privatisation process of Pakistan Discos has been scheduled in such a manner that it not only provides sufficient time to the investors but also ensures continuous progress throughout the entire privatisation process. According to the deadlines set by the Privatisation Commission, the deadline for submission for Fesco is July 7, 2026, for Gepco it is August 6, and for Iesco it is September 7.
An online investor briefing will be conducted by the commission together with its financial advisers in order to provide information regarding the investment opportunity, structure of the deal, and procedure involved. The Privatisation Commission will further reach out to potential investors and other players in the power sector in order to improve on the current tariff structure, multi-year tariff system, business model, and competitive suppliers’ framework.
Performance-Based Returns to Replace Political Management
The reform structure of Pakistan Disco privatisation emphasizes a return structure that is based on performance and efficiency in order to ensure that the interests of private investors are aligned with improvements in consumer service.
The private sector purchaser will be able to take advantage of the current Disco infrastructure and its customer base to generate more business opportunities other than just the distribution of power — an option that offers profit potential outside of the traditional utilities’ regulated rate of return.
