GEPCO and FESCO Chosen for First Phase of Privatisation
The federal government has moved a step closer to opening up the power distribution sector to private investment, with Gujranwala Electric Power Company (GEPCO) and Faisalabad Electric Supply Company (FESCO) selected as the starter cases for privatisation. According to reports, the Privatisation Commission has decided to offer these two distribution companies (DISCOs) to the private sector in the first phase of its new programme.
Letters of Interest (LoIs) for GEPCO and FESCO are expected to be issued by the end of the current month, as the government aims to complete the transactions by the close of the ongoing fiscal year. The move is part of a broader effort to reduce losses, improve service delivery and lessen the financial burden of loss-making utilities on the national budget.
Questions Remain Over Mode of Privatisation
Despite the selection of GEPCO and FESCO, there is still no full clarity on the exact mode of privatisation that will be used. Well-informed sources say that key questions remain open, including whether the government should opt for outright divestment of majority stakes, long-term concessions, or a mix of management contracts and partial share sales.
The case of Islamabad Electric Supply Company (IESCO) underlines these uncertainties. Its privatisation, whether through full divestment or a long-term concessional model, has been put on hold for now. This pause suggests that policy-makers are still debating the best approach for strategic urban DISCOs and want to test models on a limited basis before expanding to other companies.
Financial Adviser Proposes Restructuring and Transaction Options
Financial adviser Alvarez & Marsal has submitted a report to the Privatisation Commission, outlining restructuring plans and possible transaction structures for the selected DISCOs. The proposals include options for balance sheet clean-up, tariff and regulatory adjustments, and alternative ways of sharing risk and responsibility between the state and private investors.
After consultations with stakeholders, the Privatisation Commission is expected to seek formal approval of the transaction structure and restructuring plan from the Privatisation Commission Board and the Cabinet Committee on Privatisation (CCoP) by the last week of January 2026. Once the CCoP gives the green light, an Expression of Interest (EOI) is to be published by the end of January 2026, inviting potential investors to participate in the bidding process.
Steering Committee Formed to Fast-Track DISCO Privatisation
To keep the process on track, the government has set up a high-powered Steering Committee tasked with guiding and overseeing the privatisation of DISCOs. The committee is headed by Deputy Prime Minister Ishaq Dar and includes Adviser to the Prime Minister on Privatisation Muhammad Ali, Power Minister Sardar Awais Leghari and senior officials from the Power Division and Privatisation Commission.
Members include Secretary Power Dr Fahre Alam Irfan, Secretary Privatisation Division Hammad Shamimi, Secretary Privatisation Commission Usman Akhtar Bajwa, Additional Secretary Power Division Syed Imtiaz Hussain Shah, Joint Secretary Power Division Ghulam Rasool Anjum and PPMC Managing Director Abid Lodhi. Together, they are expected to coordinate decisions across ministries and ensure that key approvals are not delayed by bureaucratic bottlenecks.
Mandate and Responsibilities of the Steering Committee
The Steering Committee has been given a wide-ranging mandate to spearhead the privatisation of power distribution companies using a whole-of-government approach. Its terms of reference include reviewing and rationalising timelines to accelerate the process, developing a comprehensive communication strategy to inform stakeholders and address concerns, and ensuring full compliance with relevant laws and regulations.
The committee is also responsible for facilitating inter-ministerial coordination for fast-track approvals, proactively identifying and mitigating risks, and examining any related issues that may require high-level attention. To maintain pressure and transparency, the committee must submit a weekly progress report to the Prime Minister, highlighting milestones achieved versus targets through a structured matrix.
What Privatisation Could Mean for Consumers and Investors
For consumers and businesses in GEPCO and FESCO service areas, the proposed privatisation could bring changes in service quality, billing practices and complaint handling over the medium term. Supporters argue that private management can help cut line losses, improve recovery rates and reduce outages by investing in modern systems and better governance.
However, critics warn that if the process is not designed carefully, privatisation could lead to tariff pressures or uneven service standards. Much will depend on the final transaction structure, regulatory safeguards and the performance obligations built into concession or share sale agreements. For investors, the key questions will centre on clarity of policy, stability of regulation and the government’s willingness to enforce contracts once transactions are closed.
