FESCO, GEPCO and IESCO Privatisation Targeted for Q1 2027

Government Targets First Three Disco Privatisations in Q1 2027

The federal government plans to privatise three power distribution companies (Discos) during the first quarter of 2027, revising its earlier bidding timeline after prospective investors requested more time to examine the transactions.

Prime Minister's Adviser on Privatisation and Privatisation Commission Chairman Muhammad Ali said on Saturday that due diligence was underway for Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO) and Islamabad Electric Supply Company (IESCO).

The government had initially planned to hold bidding in December 2026. However, Muhammad Ali said the process could be delayed slightly because of the complexity of the transactions and requests from potential investors for additional time.

Work has also begun on the proposed privatisation of Hyderabad Electric Supply Company (HESCO) and Sukkur Electric Power Company (SEPCO), with their transactions targeted for completion in the second quarter of 2027.

Lahore, Multan, Peshawar and Hazara distribution companies are also part of the programme, with the government aiming to complete their privatisation during the second half of 2027.

Power sector reforms and investor concerns

Muhammad Ali described power sector reforms as a national security priority, arguing that high electricity costs were weakening industrial competitiveness, exports and economic growth.

He emphasised the need to bring down electricity tariffs and introduce competition in the power supply market to discourage consumers and industries from shifting away from the national grid.

Citing the experience of K-Electric, he acknowledged that investors had concerns about regulatory uncertainty, tariff adjustments and the protection of long-term investments.

To address these issues, the government is working to finalise investment plans and multi-year tariffs before launching the bidding process.

Performance targets for privatised companies

Under the proposed framework, privatised Discos would be expected to improve their operations through smart metering, greater use of technology, lower transmission and distribution losses, improved bill recovery and more reliable electricity supply.

Investors would face penalties if they failed to meet agreed performance targets. At the same time, improvements in efficiency and reductions in losses would be rewarded, with the resulting benefits also intended to reach consumers.

The Privatisation Commission has prepared a reform paper covering electricity tariff structures, investment plans, business operations and the development of a competitive power supply market.

Muhammad Ali said the government planned to make the proposals public by mid-November after consultations with relevant institutions, the prime minister and the Steering Committee.

Competitive electricity market and employee safeguards

The proposed reforms envisage a gradual transition away from the uniform electricity tariff towards a competitive supplier-based system. However, a supplier of last resort would remain available for consumers who cannot access alternative electricity providers.

Muhammad Ali said investors would receive returns in Pakistani rupees rather than dollars. These returns would be linked to inflation and calculated using the capital asset pricing model.

On employment matters, he said safeguards would be introduced to prevent investors from taking adverse action against Disco employees or changing their employment conditions for a specified period after privatisation.

He added that existing employees would continue to have an important role in operating the electricity distribution network following the transactions.

The adviser also revealed that the government was examining the possible privatisation of Pakistan State Oil (PSO), Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL). However, certain strategic activities of PSO could remain under government control.