PIA-style model proposed for DISCO privatisation
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.
