ISLAMABAD: The government has proposed a new financial structure for the privatisation of three major power distribution companies. The plan covers Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO) and Islamabad Electric Supply Company (IESCO).The proposal is based on the restructuring model used during the privatisation process of Pakistan International Airlines (PIA). Under the proposed plan, selected assets and liabilities of the three companies will be separated from their balance sheets.The government plans to establish a Special Purpose Vehicle (SPV) for this purpose. The SPV will be owned by the government. It will hold specific assets and liabilities removed from the DISCOs. The restructuring is aimed at making the companies more attractive to private investors. The government wants to offer financially stronger entities to potential buyers.Land assets are among the items expected to be separated from the DISCO balance sheets. Liabilities related to retired employees and pension benefits will also be shifted to the SPV.These pension-related liabilities were worth around Rs312 billion for the three companies as of June 2025. The final amount could change after the companies’ balance sheets are restructured. The government plans to use audited financial results for March 2026 as the basis for the final calculation.The three DISCOs had combined assets of around Rs1.2 trillion in June 2025. Their combined liabilities stood at approximately Rs1.05 trillion.The companies together reported net positive equity of around Rs145 billion. However, the financial position of the three companies varies considerably.GEPCO had negative equity of around Rs14.4 billion as of June 2025. The final figures may be different because the government is using March 2026 audited accounts for the restructuring process. The Privatisation Commission board has recommended that the Cabinet Committee on Privatisation approve the restructuring plans. The plans cover the first group of DISCOs selected for privatisation.The proposed arrangements have been prepared using audited financial statements for the period ending March 31, 2026. Officials believe the new structure could increase the value of the companies for the government.It is also intended to make the transactions commercially viable for private-sector investors. The government hopes the approach will attract stronger interest from domestic and international buyers.The strategy closely resembles the model adopted for PIA. During the airline’s privatisation process, the government separated more than Rs650 billion in liabilities from PIA’s balance sheet.The move was designed to leave the airline in a stronger financial position before its transfer to new owners. A similar approach is now being considered for the three DISCOs.The Privatisation Commission has been informed that both local and foreign investors have shown interest in the companies. The government has already announced deadlines for Expressions of Interest.Investors interested in FESCO must submit their Expressions of Interest by August 7, 2026. The deadline for GEPCO is August 21, 2026.For IESCO, the deadline has been set for September 7, 2026. FESCO has a relatively stronger financial position among the three companies.Its assets stood at around Rs410.3 billion as of June 2025. Its liabilities were approximately Rs347 billion.The company reported positive equity of around Rs63 billion. The equity position was supported by deposits for shares and gains from asset revaluation.FESCO also recorded a profit after tax of around Rs9.4 billion. Its non-current liabilities stood at approximately Rs217.6 billion.Staff retirement benefits accounted for around Rs123 billion of these liabilities. The company’s current liabilities were estimated at about Rs130 billion.Trade payables made up around Rs118 billion of the current liabilities. GEPCO reported a profit after tax of around Rs13.7 billion.Its total assets stood at approximately Rs238 billion. However, its equity remained negative at around Rs14.4 billion.The company’s total liabilities were around Rs252.5 billion. Staff retirement benefits accounted for approximately Rs79 billion.IESCO reported a loss after tax of around Rs1.42 billion during the same period. The company had total assets of approximately Rs547 billion.Its liabilities stood at around Rs450 billion. Despite recording a loss, IESCO had positive equity of around Rs97 billion. The company’s equity position was supported by a share deposit of approximately Rs67 billion. It also benefited from a surplus revaluation of around Rs158 billion.IESCO’s liabilities included staff retirement benefits worth around Rs110 billion. The company also carried deferred tax liabilities.The proposed privatisation is part of Pakistan’s wider power-sector reform programme. It is also linked to commitments made under Pakistan’s agreement with the International Monetary Fund (IMF).Pakistan has repeatedly pledged to reduce government involvement in the power distribution sector. The commitment to privatise at least three DISCOs has been made several times since 2013.Previous attempts, however, failed to reach completion. The IMF has urged Pakistan to implement structural reforms in the power sector.The broader objective is to reduce electricity costs for households and businesses. The reforms also aim to improve the operational efficiency of power distribution companies.The IMF has previously noted delays in the private-sector participation process for DISCOs. The first group, consisting of FESCO, GEPCO and IESCO, faced delays after potential investors raised concerns about the proposed transaction structure.The government has now said that those concerns have been addressed. Officials expect the privatisation process to move forward.The government is targeting completion of the first phase by early 2027. The proposed SPV will be an important part of the process.It is intended to separate selected financial burdens from the three companies before they are offered to private investors. The government hopes the restructuring will improve investor confidence and make the DISCO transactions more commercially attractive.

ISLAMABAD: The government has approved 16 development projects with a combined estimated cost of around Rs1.15 trillion, including the controversial Lahore-Sahiwal-Bahawalnagar motorway and the fifth extension of the Tarbela hydropower project, whose cost has surged by nearly 282% from the original estimate. The decisions were taken by the Executive Committee of the National Economic Council (ECNEC), chaired by Deputy Prime Minister Ishaq Dar. Several of the projects had previously been considered by development forums and returned with revised costs following delays, changes in scope and rising construction expenses. Of the total approved amount, approximately Rs320 billion represents additional expenditure linked to cost increases and delays, highlighting the financial pressures facing major public-sector development schemes. The government, however, issued only a brief statement following the ECNEC meeting and did not provide a complete breakdown of all the projects and their financial details. The omission of the Lahore-Sahiwal-Bahawalnagar motorway from the official summary was particularly notable given the political controversy surrounding the scheme. Lahore-Bahawalnagar motorway approved The ECNEC approved the Rs407 billion Lahore-Sahiwal-Bahawalnagar Motorway project, retaining its original 295-kilometre alignment in accordance with a directive issued by Prime Minister Shehbaz Sharif earlier this year. The first package, covering an 18.5-kilometre stretch from the Lahore Ring Road to Raja Jang Interchange, was approved at an estimated cost of Rs49 billion through federal financing. The project has faced opposition from the Pakistan Peoples Party (PPP), which has raised objections to the scheme and its proposed alignment. Given the heavy financial burden on the Public Sector Development Programme (PSDP), the ECNEC directed the National Highway Authority (NHA) to examine public-private partnership options for sections that could attract private investment. For commercially viable portions, the NHA will arrange its contribution through its own revenues in the form of Viability Gap Funding. For sections that are considered financially unviable, alternative arrangements will be explored, including contributions from the Punjab government, loans or financing from international financial institutions and direct federal funding, subject to the availability of resources. Tarbela extension faces major cost increase One of the most significant approvals was the fifth extension of the Tarbela project, which received approval at a revised cost of Rs316 billion. The project’s original estimated cost stood at approximately Rs82 billion, meaning its revised price tag represents an increase of about 282%. The steep escalation has already attracted scrutiny from government officials. During the Central Development Working Party (CDWP) review, Planning Minister Ahsan Iqbal reportedly raised concerns over project management, transparency and oversight. Questions were also raised regarding the technical capacity of personnel associated with the project. The Ministry of Water Resources had previously highlighted shortcomings in an inquiry into problems encountered during project implementation. An inquiry into the failure of the downstream cofferdam reportedly concluded that the structural collapse was linked to design changes, inadequate supervision and delayed administrative action rather than flooding. The findings attributed the failure to the shift from roller-compacted concrete to a rock-fill structure, along with weaknesses in project oversight. The incident resulted in delays and financial losses, adding to concerns over the project’s rising cost. The Ministry of Finance also sought an explanation for the substantial increase in the project’s estimated cost. Since the scheme is being financed through international financial institutions, the ministry asked the Water and Power Development Authority (Wapda) to provide details regarding the mechanism for repayment. Despite the concerns and requests for additional information, the ECNEC ultimately approved the revised project cost. Road and infrastructure schemes The committee also approved the 48-kilometre Khwazakhela-Besham Expressway at a revised cost of Rs116.6 billion. The new estimate is around 47% higher than the original cost. Another interprovincial road scheme aimed at improving connectivity between Gilgit-Baltistan and Azad Jammu and Kashmir was approved at Rs29 billion, representing an increase of approximately Rs10 billion over its initial estimate. The Rathoa Haryam Bridge over the reservoir channel on the Mirpur-Islamgarh Road also received approval at a revised cost of Rs10.8 billion. Its original estimate had been only Rs1.4 billion, reflecting a substantial increase over the initial projection. The ECNEC further approved the Lahore Wastewater Treatment Plant at a cost of Rs56.6 billion, around Rs4.2 billion above the earlier estimate. Poverty alleviation and education initiatives The Southern Punjab Poverty Alleviation Project was approved at Rs29.7 billion and will cover 10 districts: Bahawalnagar, Bahawalpur, Bhakkar, Dera Ghazi Khan, Khushab, Layyah, Mianwali, Muzaffargarh, Rahim Yar Khan and Rajanpur. The scheme includes an additional cost escalation of around Rs6.8 billion and is aimed at improving socioeconomic conditions and livelihood opportunities in some of the region’s less-developed areas. The ECNEC also sanctioned Rs10.6 billion for the Fulbright scholarship programme, under which 816 scholarships are planned. Of these, 550 MS and 141 PhD scholarships will be administered through the United States Educational Foundation in Pakistan (USEFP), while the Higher Education Commission (HEC) will provide funding for another 125 PhD scholarships through the PSDP. Water projects in Sindh and Balochistan The Mazarani Dam project in Qambar Shahdadkot, Sindh, was approved at an estimated cost of Rs16.1 billion. The committee directed the provincial authorities to begin Command Area Development alongside construction of the main dam so that the project’s agricultural and economic benefits could be realised during its second phase. The Winder Dam project was also approved at Rs21.6 billion, with the federal government expected to contribute Rs15.6 billion. Meanwhile, the Mashkel Dam in Washuk, Balochistan, received approval at a cost of Rs41 billion. The project will be financed by the Balochistan government, while an environmental assessment report will be incorporated into the official project documentation.w Power-sector efficiency projects The ECNEC approved several schemes aimed at improving the performance of electricity distribution companies. A Rs24 billion project for the Supply, Installation, Testing and Commissioning of Asset Performance Management Systems at Lahore Electric Supply Company (LESCO) was approved. The committee also sanctioned Rs19 billion for the Electricity Distribution Efficiency Improvement Project of Hyderabad Electric Supply Company (HESCO). A similar initiative for Peshawar Electric Supply Company (PESCO) was approved at Rs30.2 billion. These projects are intended