PM Shehbaz directs adoption of 'comprehensive strategy' to attract investors for Discos' privatisation

ISLAMABAD: Prime Minister Shehbaz Sharif on Wednesday directed relevant authorities to adopt a “comprehensive strategy” to attract international investors for the privatisation of state-owned power distribution companies (Discos) and complete the restructuring of the Privatisation Commission within one month. “A comprehensive and effective strategy should be adopted to ensure the participation of investors meeting international standards in the privatisation of Discos,” the PM said while presiding over a review meeting in Islamabad, according to a statement issued by his office. But, consumers’ interests should also be prioritised in the privatisation process, he instructed. The premier further stated that all stages of the privatisation process should be completed within the stipulated timeframes and in accordance with established rules and international best practices while ensuring profitable outcomes. He also expressed satisfaction over “successful roadshows” in Pakistan and abroad to attract investors, noting that the shows generated interest in the privatisation programme. Officials at the meeting told the PM that the roadshows aimed at attracting investors for the Gujranwala Electric Power Company (Gepco), Faisalabad Electric Supply Company (Fesco) and Islamabad Electric Supply Company (Iesco) in the first phase of privatisation had been concluded, according to the PMO. It added that the meeting was told that investor outreach activities and roadshows in Turkey, Saudi Arabia and China had produced encouraging results. The meeting was also briefed on the progress of the first phase of Discos’ privatisation and efforts to strengthen the Privatisation Commission through institutional restructuring and the recruitment of skilled professionals. Regarding this, the PM directed that the Privatisation Commission should strengthen its workforce by recruiting experts with qualifications meeting international standards in the fields of finance, law and information technology. Their expertise would enhance the institution’s capacity and help attract greater investment, he remarked. PM Shehbaz also directed relevant officials to ensure that recommendations from highly qualified professional consultants were incorporated in the privatisation process and all necessary legal arrangements and financial regulatory frameworks were completed in a timely manner. Moreover, “consumers’ interests must remain a priority during privatisation and a comprehensive and effective grievance redress mechanism be formed for the consumers of entities being privatised”, he said. Energy Minister Sardar Awais Ahmed Khan Leghari, Economic Affairs Minister Ahad Khan Cheema, Information Technology Minister Shaza Fatima Khawaja, PM’s Adviser on Privatisation Muhammad Ali and senior government officials attended the meeting, the PMO stated. On May 19, the Privatisation Commission had invited expressions of interest from local and international investors for the much-delayed sale of Iesco, Gepco and Fesco. The three are considered the most viable Discos among the 11 electricity distribution companies originally carved out of the Water and Power Development Authority (Wapda) in 1998. The divestment is aimed at improving service quality through private-sector management practices. The transaction offers investors an opportunity to acquire between 51pc and 100pc shareholding, along with management control, in each of the three distribution companies. The Privatisation Commission set July 7 for submission of expressions of interest (EoIs) for Fesco, August 24 for Gepco and Sept 7 for Iesco. In June, Prime Minister’s Adviser on Privatisation Muhammad Ali told Dawn the first Discos in the country would be sold in 2026-27. “We will run these three parallel transactions and hold bidding one after the other in October, November and December 2026,” he said, adding the transaction structures would have to be “corrected” before October and “we will do it”. He said the Privatisation Commission had completed domestic soft marketing of three Discos of Faisalabad, Gujranwala and Islamabad in seven major cities, with chambers of commerce and industry and business houses and would now be expanding abroad mainly to Saudi Arabia, China and Turkiye and approaching other Middle Eastern capitals — Qatar, Bahrain, Oman and so on — virtually and through transaction advisers to tap in investors and technical operators. The uniform consumer tariff will continue for the time being, but privatisation, resulting efficiency gains, and the absorption of surplus capacity would reduce the average uniform tariff, he hoped. He said there was robust investor interest in the power sector. However, they wanted an 18pc dollar-based return, an end to uniform consumer tariffs, permission for self-power generation by new owners, freedom for the private sector to ‘buy and sell electricity’, and the government’s exit from the sector. They also wanted 8-10 year tariff visibility, including investment plans. Ali said the government would not allow dollar-based returns at all. “We will provide rupee-based returns of 14-15pc plus key performance indicators (KPIs) that allow profitability of up to 18-20pc while sharing efficiency gains.” Fesco, Gepco and Iesco collectively serve more than 14 million consumers across major industrial, commercial and urban centres of Punjab, the Islamabad region, and parts of Azad Jammu and Kashmir. Their privatisation forms part of the government’s broader economic reform agenda aimed at improving efficiency, strengthening service delivery, attracting foreign and domestic investment, and promoting sustainable growth in Pakistan’s power sector, the Privatisation Commission has said. Alongside these three transactions, the PM’s adviser had said that the Sukkur and Hyderabad electric companies would also be restructured and improved to complete their privatisation by August-September next year.