Pakistan’s long-stalled privatisation of electricity distribution companies (Discos) has undergone a significant policy revision, with the government now planning to offer only the Gujranwala Electric Power Company (GEPCO) for outright sale. Previously, the first phase targeted three relatively efficient Discos—GEPCO, Islamabad Electric Supply Company (IESCO), and Faisalabad Electric Supply Company (FESCO)—for full privatisation. This shift, reported on December 27, 2025, comes amid persistent delays in meeting conditions precedent, including property transfers and cooperation from Discos. Prime Minister Shehbaz Sharif, during a December 15 meeting, directed accelerated resolution of these hurdles to attract international investors and improve sector efficiency.
Reasons Behind the Policy Shift The change stems primarily from bureaucratic and operational delays, particularly Discos’ reluctance to transfer properties to the Privatisation Commission. Due diligence by adviser Alvarez & Marsal highlighted unresolved issues, prompting a hybrid approach. While GEPCO proceeds to outright privatisation, IESCO and FESCO will be offered under long-term concession agreements, inspired by Turkey’s successful model of private-sector participation focused on loss reduction and service improvements. Power Minister Sardar Awais Ahmad Khan Leghari has emphasised drawing lessons from Turkiye to enhance operational performance.
Timeline and Broader Reforms Letters of Intent are slated for issuance in January 2026, with Expressions of Interest for the second phase due by December 31, 2025. The second phase includes Lahore (LESCO), Multan (MEPCO), and others for potential sale, while high-loss entities like Peshawar (PESCO) and Quetta (QESCO) face concessions or management contracts initially. This aligns with broader power sector reforms under the National Electricity Policy, aiming to curb circular debt, reduce subsidies, and introduce competition via the Competitive Trading Bilateral Contract Market. By prioritising concessions, the government seeks to mitigate risks while injecting private expertise into a sector plagued by high transmission losses and financial burdens.