Privatisation of 3 Power Distribution Companies Progresses

The Financial Advisor (FA) has been tasked to structure the privatisation of three power Distribution Companies (DISCOs): Islamabad Electric Supply Company (IESCO), Gujranwala Electric Power Company (GEPCO), and Faisalabad Electric Supply Company (FESCO). The Privatisation Commission (PC) will seek approval from the Cabinet Committee on Privatisation (CCoP) before proceeding to market the transaction, sources revealed to Business Recorder.

Key Developments

1. Privatisation Timeline:
   • Minister for Power, Sardar Awais Ahmad Khan Leghari, affirmed the privatisation of IESCO, GEPCO, and FESCO is targeted for completion by the end of 2024.
2. Financial Advisor Hiring:
   • The Request for Proposal (RFP), developed in consultation with the Power Division and World Bank, was circulated among pre-qualified Financial Advisors in August 2024.
   • The hiring process for the FA is currently underway and will include reviewing completed tasks and suggesting necessary adjustments.
3. World Bank’s Role:
   • The World Bank has provided a detailed report on the privatisation plan, which has been reviewed by relevant stakeholders, including the Privatisation Commission and Power Division.
   • The World Bank report tasks require implementation by January 31, 2025, involving coordination with DISCOs, Central Power Purchasing Agency Guarantee (CPPA-G), and NEPRA.
4. Next Steps:
   • The FA will structure the transaction based on completed tasks and milestones.
   • Investor eligibility criteria and qualifications will be refined after feedback from prospective investors during market sounding.

Challenges and Directives

1. Pending Tasks:
   • Nine prior actions, aligned with the World Bank deliverables, must be completed by January 31, 2025, as directed by the Special Investment Facilitation Council (SIFC).
2. Timelines and Accountability:
   • The Privatisation Division must expedite FA hiring and issue the RFP for the first phase (IESCO, GEPCO, FESCO).
   • Detailed timelines and milestones must be presented to the SIFC by January 15, 2025.
3. Human Resource and Communication Firms:
   • The Power Division is responsible for drafting the Terms of References (ToRs) for appointing HR and communication firms, with the PC yet to provide its feedback.

Prime Minister’s Concern

Prime Minister Shehbaz Sharif, during a meeting on December 27, 2024, expressed concerns over delays in appointing DISCOs’ CEOs and emphasised improving their performance alongside privatisation efforts.

The privatisation of DISCOs aims to enhance efficiency, attract investment, and align with global best practices. However, meeting strict deadlines and fulfilling prior actions remain critical for the success of the initiative.