Pakistan's Cabinet Committee on Privatization has approved the sale of between 51 percent and 100 percent stakes, along with management control, in three state-owned electricity distribution companies. The decision, announced on Friday, is part of broader efforts to overhaul the country's troubled power sector.
Details of the Privatization Plan
The committee reviewed the proposed privatization of Islamabad Electric Supply Company (IESCO), Gujranwala Electric Power Company (GEPCO), and Faisalabad Electric Supply Company (FESCO). The meeting was chaired by Deputy Prime Minister Ishaq Dar, according to a statement from his office.
Key Approval: The committee approved the Transaction Structure and decided to offer an outright sale of 51 percent to 100 percent share capital in each distribution company (DISCO) along with management control, subject to cabinet approval.
Background and Context
Pakistan has been pursuing power sector reforms under an International Monetary Fund (IMF)-backed economic stabilization program. The program aims to reduce losses, improve recoveries, and tackle chronic circular debt that has strained public finances for years.
The move follows the landmark privatization of Pakistan International Airlines in December, which officials described as a breakthrough in the government's long-stalled privatization drive.
Government's Vision
Deputy Prime Minister Ishaq Dar noted that the initiative is intended to strengthen service delivery, ensure reliable electricity supply, and bring private sector efficiency into the sector. The meeting was attended by Power Minister Awais Leghari, Adviser on Privatization Muhammad Ali, Special Assistant to the Prime Minister Tariq Bajwa, and senior officials from the privatization and power divisions.
Challenges in the Power Sector
Pakistan's distribution companies have long grappled with high transmission losses, weak bill recoveries, and inefficiencies that contribute to the mounting circular debt crisis. Under the IMF program, the government plans to privatize other loss-making state-owned enterprises as part of broader structural economic reforms.
- IESCO, GEPCO, and FESCO are among the key distribution companies facing operational challenges.
- The privatization aims to attract private investment and improve management efficiency.
- Successful privatization could reduce the financial burden on the government and enhance service quality for consumers.
