Pakistan sets 2027 deadline to sell nine DISCOs

Pakistan has set an ambitious target to privatise nine electricity distribution companies (DISCOs) by December 2027, as the government seeks to reduce the heavy financial losses suffered by the power sector.

The companies currently contribute billions of rupees in losses and require substantial government subsidies each year. The government has now presented its privatisation roadmap to the International Monetary Fund (IMF), with the first three DISCOs expected to be sold during the first quarter of next year.

Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO) and Islamabad Electric Supply Company (IESCO) are at the due diligence stage. Under the revised schedule, FESCO is expected to be sold in January, GEPCO in February and IESCO in March 2027.

The second phase will cover Hyderabad Electric Supply Company (HESCO) and Sukkur Electric Power Company (SEPCO), with their privatisation planned between April and June 2027. Peshawar, Hazara, Lahore and Multan distribution companies are expected to be sold by December 2027.

Quetta Electric Supply Company (QESCO) has been excluded from the current privatisation programme because of its significant financial problems. The company recorded losses of around Rs112 billion and received about Rs54 billion in subsidies during the last fiscal year.

The government plans to separate certain liabilities, including pension-related obligations, from the balance sheets of companies being prepared for sale. The liabilities of retired employees of FESCO, GEPCO and IESCO alone stood at around Rs312 billion as of June 2025.

These assets and liabilities are expected to be transferred to a special purpose vehicle as part of the approved transaction structure. Officials believe the approach could make the companies more attractive to potential investors.

However, the IMF has raised questions about whether the proposed structure will fully address the financial problems of the distribution sector. Concerns have also been raised over the government’s decision to maintain a uniform electricity tariff after privatisation.

Under the policy, consumers across the country would continue paying broadly the same electricity rates regardless of the efficiency of the distribution company serving them. This means customers in areas with better-performing DISCOs could continue contributing indirectly to the costs of less efficient companies.

The IMF has also sought lessons from the privatisation of K-Electric, where the government continues to provide substantial subsidies despite private ownership.