Investor concerns cloud sale of three power distribution companies

The Privatisation Commission is facing investor concerns over policy inconsistency, regulatory uncertainty and the post-privatisation framework as it markets Faisalabad Electric Supply Company, Gujranwala Electric Power Company and Islamabad Electric Supply Company.

Business Recorder reported that a team led by Adviser to the Prime Minister on Privatisation Muhammad Ali has held roadshows in Turkiye, Saudi Arabia, China and nearly eight Pakistani cities.

The Commission and its financial adviser met more than 30 local business groups and over 23 international investors, including 11 groups in Turkiye, six in Saudi Arabia and seven in China.

Sources said around five local consortiums, mainly from Karachi, Lahore and Faisalabad, had shown interest. Groups linked to PIA, the textile sector and a former federal minister were also among prospective bidders.

Muhammad Ali said the government planned to offer investors a base return of 14%–15%, which could rise to 18%–20% through improved recoveries, lower losses and operational efficiencies. Tariffs would remain rupee-based.

Investors have sought Multi-Year Tariffs locked in for eight to 10 years, stronger regulation, permission for self-generation and greater competition in electricity buying and selling.

The proposed framework offers regulated returns of around 13.2%–13.4%, with downside protection and gains for exceeding performance targets.

The plan assumes 100% revenue recovery, compared with the industry average of 96.6%, and transmission and distribution losses of 8.6%–10.6%, against the national average of 18.1%.

The government also plans to settle or adjust legacy payables and receivables, carve out selected assets and pension liabilities, separate land through long-term lease-back arrangements and convert government share deposits into equity.

Investors may acquire between 51% and 100% of each company with full management control, but bidders will be restricted to one company from the first batch.

The deadlines for Expressions of Interest are July 7 for Fesco, August 7 for Gepco and September 7 for Iesco. Bidding is targeted for October, November and December 2026.

The government expects to complete five transactions in FY2026-27. Fesco, Gepco and Iesco will be privatised, while Hesco and Sepco will be offered under long-term concession agreements.