ISLAMABAD: Pakistan said on Wednesday investor roadshows in Saudi Arabia, Türkiye and China had produced “encouraging results” as it seeks international buyers for three state-owned electricity distribution companies under an IMF-backed privatization drive.
Islamabad is seeking to reduce the state’s role in the economy and limit losses from public-sector companies under its economic reform program with the International Monetary Fund. Pakistan’s official 2024-29 privatization program covers 25 state assets, including electricity distributors and generators, banks, insurance companies, airports and the Roosevelt Hotel in New York.
The campaign gained momentum in December when a consortium led by Arif Habib Corporation won an auction for a 75 percent stake in Pakistan International Airlines for Rs135 billion, or about $482 million. The government handed over management control of the formerly state-owned flag carrier in June after the transaction’s first financial closing.
“Roadshows in Türkiye, Saudi Arabia and China, and contacts with investors in connection with the privatization, are yielding encouraging results,” the Prime Minister’s Office said in a statement after PM Shehbaz Sharif reviewed the program.
Pakistan has selected the Islamabad Electric Supply Company, Faisalabad Electric Supply Company and Gujranwala Electric Power Company for the first round of power-distribution sales. Known collectively as DISCOs, the companies purchase electricity from the national system and deliver it to homes, factories and businesses within their designated regions.
The government has invited domestic and international investors to acquire between 51 percent and 100 percent of each company, together with management control. The three distributors collectively serve more than 14 million customers across Islamabad and major industrial and commercial areas of Punjab province.
Pakistan’s power sector has long struggled with electricity theft, weak bill collection, technical losses and poor governance. Those problems contribute to the sector’s circular debt, or unpaid obligations that accumulate across electricity producers, fuel suppliers, distributors and the government, and ultimately increase pressure for higher consumer tariffs and public subsidies.
The IMF says greater private-sector participation in DISCO management is intended to improve efficiency and governance and address the causes of circular debt. It said the first group of transactions had been delayed after investors raised concerns during market consultations, but that Pakistan expected to complete the process by early 2027.
The Privatization Commission has already approved transaction structures, prequalification criteria and restructuring plans for the three companies. It subsequently invited separate expressions of interest for each distributor as it moved toward identifying qualified bidders.
Sharif directed officials to adopt a “comprehensive and effective strategy” to ensure the participation of international-standard investors and complete each stage within the prescribed timetable, according to the PMO statement.
He also ordered the ongoing institutional restructuring of the Privatization Commission to be completed within one month, including the recruitment of international-standard financial, legal and information-technology specialists.
The prime minister said consumer interests must remain a priority throughout the sales and instructed officials to establish systems for resolving complaints after the companies move into private ownership. He also called for the timely completion of legal arrangements and financial regulations needed to support the transactions.
The government is preparing additional electricity distributors for later rounds. Its privatization program includes companies serving Lahore, Multan, Hyderabad, Sukkur, Peshawar and Hazara, along with four state-owned power-generation companies.
Under commitments recorded in Pakistan’s latest IMF review, the government is working to resolve outstanding subsidy claims, intercompany balances and other financial problems at the Hyderabad and Sukkur distribution companies by the end of December before seeking private-sector participation. It says similar work will eventually be carried out for the remaining distributors.
Other transactions in the broader privatization pipeline include long-term private operation of Islamabad International Airport, the planned sale of state-owned agricultural lender Zarai Taraqiati Bank and a proposed joint venture for the redevelopment of the Roosevelt Hotel.
