10 firms clear Fesco privatisation bidding stage

ISLAMABAD: The Privatisation Commission has prequalified 10 companies and business groups to participate in the next phase of the proposed sale of Faisalabad Electric Supply Company (Fesco), while a Chinese power company was declared non-compliant over documentation submitted in Mandarin.

K-Electric (KE), which has direct experience in electricity distribution, also withdrew from the process after failing to provide audited financial statements for the past three years.

The Privatisation Commission board approved the list of eligible bidders during a meeting chaired by Adviser to the Prime Minister on Privatisation Muhammad Ali.

The government plans to sell between 51% and 100% of Fesco’s shares, with the profitable power distribution company serving Faisalabad and surrounding areas.

Three Turkish companies — Aktor Elektrik Enerji Yatirimlari, Genvera Enerji and Cengiz Enerji — have qualified for the financial bidding stage.

Several major Pakistani business groups have also secured prequalification. These include a consortium led by Nishat Mills, along with Nishat Power, Nishat Chunian, Lalpir, Pak Elektron and Kohinoor Energy.

Maple Leaf Cement, Kohinoor Textile, Engro Energy, Sapphire Fibers, Hub Power Holdings, Lucky Cement, Shirazi Investments and Artistic Milliners are also among the successful applicants.

The commission said the financial adviser had recommended the 10 parties for prequalification and their movement to the next stage. The successful bidders will now receive access to a virtual data room to conduct detailed due diligence before proceeding with the transaction.

The Chinese applicant, Jiangxi Electric Power Construction Company Limited, was excluded after submitting its required information in Mandarin despite the requirement for documentation in English.

The company, a subsidiary of Power Construction Corporation of China, was given additional time to resubmit the required information but failed to meet the requirement, according to officials.

KE also failed to appear on the final prequalified list. A Privatisation Commission official said the company had not submitted audited financial statements for the previous three years.

KE maintained that the statements could not be finalised because its Multi-Year Tariff has yet to be approved by the National Electric Power Regulatory Authority. The company subsequently withdrew its expression of interest.

The power utility said it remains interested in opportunities that can create value for its stakeholders.

The development comes as the government moves ahead with a broader restructuring plan for three power distribution companies.

Under the approved arrangement, buyers of the three companies would receive around Rs911 billion in assets against Rs648 billion in liabilities, resulting in net positive equity of approximately Rs263 billion. The government would retain assets worth about Rs257 billion, largely consisting of land.

For Fesco specifically, assets worth around Rs290.5 billion are planned to be transferred against liabilities of approximately Rs226.5 billion, leaving buyers with equity of about Rs64 billion.

The government will retain around Rs73 billion worth of Fesco land under the restructuring arrangement.

Fesco reported distribution losses of around 8%, equivalent to approximately Rs1 billion, during the last financial year.

The Cabinet Committee on Privatisation has also approved raising Fesco’s authorised share capital to Rs100 billion and instructed the power division to establish a new company with authorised capital of up to Rs250 billion.