The federal government has informed the International Monetary Fund (IMF) that it plans to finalize the privatization of two power distribution companies (DISCOs) by the end of January 2025. This commitment comes as part of the government’s structural reforms under the $7 billion Extended Fund Facility (EFF).
Despite progress on the DISCOs, the government acknowledged delays in the privatization of Pakistan International Airlines (PIA) and Faisalabad Electric Supply Company (FESCO). The government had initially aimed to complete these transactions earlier, but the targets were missed.
According to the IMF report, Pakistan’s federal cabinet ratified plans in June 2024 to move forward with privatization efforts for key state-owned entities (SOEs). These include PIA and its subsidiary the Roosevelt Hotel, First Women’s Bank, House Building Finance Corporation (HBFC), and several DISCOs and GENCOs.
The government has committed to updating tariff guidelines for DISCOs, aligning them with supply and distribution licenses. Employee treatment and a communication campaign to inform the public are also part of the policy actions to be completed by January 2025. The IMF report highlights these steps as critical to meeting the structural benchmark for the program.
Further, the government plans to issue a Request for Proposals (RfP) for the first DISCO concession by May 2025. A separate RfP for the first DISCO privatization is set for September 2025.
In line with the IMF’s recommendations, the government has prioritized the privatization of profitable SOEs to reduce its footprint in the commercial sector and attract foreign investment. This is seen as crucial for boosting development and addressing Pakistan’s fiscal challenges.
