A ministerial committee has recommended that power distribution companies (Discos) be privatised instead of being transferred to provincial governments, arguing that such a move would only shift financial liabilities rather than resolve systemic inefficiencies.
The committee, headed by former Deputy Chairman Planning Muhammad Jehanzeb and comprising senior officials including Minister for Petroleum Musadik Malik and Secretary Power Rashid Mahmood Langrial, examined multiple options, ultimately favoring privatization or long-term concessions over provincial control.
According to a news report, the committee assessed the legal, financial, and regulatory challenges in privatising Discos and highlighted key concerns such as high transmission losses, low revenue collection, and persistent reliance on government subsidies. While all provinces expressed differing views on taking ownership of Discos, the lack of clarity on liability sharing deterred the committee from recommending provincialization.
The Karachi Electric (KE) model was reviewed, revealing that despite partial privatization, KE continues to depend on government support, reinforcing the argument that full privatization may yield better efficiency.
The committee suggested that loss-making Discos be handed over under long-term concession agreements, while better-performing ones, particularly in Punjab, could be fully privatised.
To attract private investment, the committee recommended regulatory reforms to ensure clear revenue streams and tariff structures. It also proposed a phased approach, starting with the privatization of Gujranwala Electric Power Company (GEPCO), Islamabad Electric Supply Company (IESCO), and Faisalabad Electric Supply Company (FESCO), followed by consideration of Multan and Lahore Discos after further assessments. Meanwhile, high-loss Discos such as Quetta Electric Supply Company (QESCO) and Tribal Electric Supply Company (TESCO) would remain under government control until improvements are made.
The committee emphasized the need for strong oversight mechanisms to prevent inefficiencies post-privatization, warning that mismanagement could lead to challenges similar to those faced by KE. It also advised against unnecessary delays, urging the government to complete regulatory groundwork before appointing a transaction advisor.
The federal cabinet has already approved long-term concessions for Hyderabad Electric Supply Company (HESCO) and GEPCO, though the committee recommended reviewing GEPCO’s status for outright privatization. The Power Division has been tasked with working on legal and structural adjustments to ensure a smooth transition, with an emphasis on minimizing consumer impact and ensuring reliable electricity supply.
