By Moaaz Manzoor

The Cabinet Committee on Privatization (CCoP) has cleared major preparatory requirements for the privatization of the first batch of state-owned power distribution companies (DISCOs).

According to the documents available with Wealth Pakistan, the CCoP approved the transaction structure for the sale of Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO), and Islamabad Electric Supply Company (IESCO), marking a key step in the government's power-sector privatization program.

The conditions precedent (CPs) for the three utilities, which make up Batch-I of the program, have been completed. Following federal cabinet approval, the shares of the distribution companies have also been transferred in the name of the president.

Property regularization has progressed alongside the share transfer. IESCO, FESCO and GEPCO are engaging provincial governments and the Water and Power Development Authority (WAPDA) to transfer their remaining properties, while titles for 403 of the 475 properties have already been transferred to the respective distribution companies.

Sector-level and company-level due diligence has also been completed by the appointed financial adviser, covering legal and regulatory matters, financial and tax affairs, environmental and safety requirements, and human resources.

The adviser has submitted restructuring plans and reports to the Privatization Commission, which is reviewing them with stakeholders, including the Power Division, as preparations continue for investor participation.

Under the approved transaction structure, the government may sell between 51% and 100% of the share capital of each Batch-I DISCO together with management control. The model allows an investor to compete for more than one company, although the successful bidder will be permitted to own shares in only one Batch-I DISCO.

Expressions of interest (EOIs) were invited on May 19, with submission deadlines set for August 7 for Fesco, August 21 for GEPCO, and September 7, 2026, for Iesco.

The Privatization Commission has also completed international roadshows to attract investors, holding meetings in Türkiye from June 22 to June 26, Saudi Arabia from June 30 to July 2, and China from July 5 to July 12.

Batch-I is the most advanced phase of the four-stage privatization program. Sukkur Electric Power Company (SEPCO) and Hyderabad Electric Supply Company (HESCO) make up Batch-II, where the appointment of a financial adviser has been finalized. The Power Division has provided comments on draft sectoral and entity-level due diligence reports, while audited financial statements for Hesco and Sepco for FY2024-25 are being prepared.

Peshawar Electric Supply Company and Hazara Electric Supply Company have been placed in Batch-III, while Lahore Electric Supply Company and Multan Electric Power Company comprise Batch-IV. The Power Division and the respective companies are working to complete the conditions precedent for these four utilities.

The privatization initiative forms part of the Privatization Program 2024-29. A consortium led by Alvarez & Marsal Middle East Limited of Dubai was appointed financial adviser on February 11, 2025, following a competitive selection process.

The latest status shows Batch-I at the investor-outreach stage, Batch-II in due diligence and financial statement preparation, while the remaining two batches are focused on completing pre-transaction requirements.

Credit: INP-WealthPk