Government reviews splitting LESCO, MEPCO before privatisation

The Ministry of Privatisation has established a high-level Technical Committee to examine the feasibility of dividing the Lahore Electric Supply Company (LESCO) and Multan Electric Power Company (MEPCO)

The Ministry of Privatisation has established a high-level Technical Committee to examine the feasibility of dividing the Lahore Electric Supply Company (LESCO) and Multan Electric Power Company (MEPCO) into two or three smaller power distribution companies before their proposed privatisation, according to informed sources.

The move is part of the government’s broader strategy to reform Pakistan’s power distribution sector and make state-owned electricity companies more attractive for private investment. LESCO and MEPCO currently serve the largest geographical areas and consumer bases among the country’s distribution companies (DISCOs), prompting officials to assess whether restructuring them into smaller entities could improve operational efficiency and facilitate the privatisation process.

Technical Committee Constituted

The committee is headed by Sajid Akram, Adviser (Power) at the Privatisation Commission. Other members include Ghulam Rasool, Joint Secretary at the Privatisation Commission; Imran Hafeez, Additional Director Tariff at the National Electric Power Regulatory Authority (NEPRA); and Abid Lodhi, Managing Director of the Power Planning and Monitoring Company (PPMC).

The committee has been tasked with conducting a comprehensive review of the proposal and submitting recommendations to the government after evaluating its technical, operational and strategic implications.

Weak Performance Raises Concerns

Officials familiar with the matter said that both LESCO and MEPCO have consistently faced operational challenges, particularly in controlling electricity theft, reducing transmission and distribution losses, and improving bill recovery. These issues have affected their financial performance and have remained a major concern for policymakers pursuing reforms in the power sector.

Recent audit reports for the fiscal year 2024-25 also highlighted unsatisfactory performance by both companies, reinforcing the need for structural reforms before moving ahead with the privatisation programme.

MEPCO: Pakistan’s Largest Distribution Company

MEPCO was incorporated in 1998 as a public sector company and operates under a permanent electricity distribution licence issued by NEPRA. The company is wholly owned by the Government of Pakistan through the Ministry of Energy.

Serving nearly 8.76 million consumers across 13 districts of southern Punjab, MEPCO is the country’s largest electricity distribution company in terms of customer base. Its extensive network includes more than 82,000 kilometres of distribution lines and over 780 grid stations, supplying electricity across a vast region bordering three provinces.

The company has initiated several modernisation projects, including the deployment of Advanced Metering Infrastructure (AMI), commonly known as smart metering, and digital billing systems aimed at improving transparency, reducing losses and enhancing customer services.

LESCO Serving Over Seven Million Consumers

LESCO also began operations in 1998 and supplies electricity to approximately 7.05 million consumers across Lahore, Kasur, Sheikhupura, Nankana Sahib and Okara. Its consumer base includes domestic, commercial, industrial, agricultural and bulk supply customers.

The company’s operational network is divided into eight circles supervised by Superintending Engineers and 41 divisions managed by Executive Engineers to oversee field operations.

In recent years, LESCO has accelerated efforts to modernise its infrastructure through the installation of smart meters, with plans to convert its entire consumer base to the Advanced Metering Infrastructure by 2029.

However, the company continues to face significant operational hurdles, including shortages of transformers and electricity meters, resulting in delays in providing new connections and replacing faulty equipment. These issues have drawn criticism from regulators and consumers alike.

Committee’s Terms of Reference

According to the approved Terms of Reference (ToRs), the Technical Committee will:

Assess the feasibility of splitting LESCO and MEPCO into two or three smaller distribution companies.

Examine the potential advantages and disadvantages of such restructuring in line with the National Electricity Plan, the government’s Power Policy and the ongoing privatisation programme.

Review whether similar committees were constituted in the past and analyse their findings, recommendations and implementation status.

The committee’s recommendations are expected to play an important role in determining whether the government proceeds with restructuring the two major DISCOs before offering them for privatisation.