ISLAMABAD: The Privatisation Commission Board on Friday approved the prequalification of 10 out of 12 interested parties (IPs) for the sale of Faisalabad Electric Supply Company (Fesco), after K-Electric (KE) withdrew its papers and a lone Chinese firm failed to demonstrate sufficient interest in the competition.
The move followed Prime Minister Shehbaz Sharifโs directive a month ago to the concerned agencies for adopting a โcomprehensive strategyโ for attracting foreign investment for the privatisation of state-owned power distribution companies (Discos) and completion of the restructuring process of the Privatisation Commission within one month.
According to informed sources, KE, the only privatised power utility in the country, has decided to pull out of the competition rather than risk getting disqualified for failure to submit its financial accounts for the last two years, an important criterion.
They further informed that the company will bid for the privatisation of another Disco as a consortium with Shahryar Chishtiโs AsiaPak Investments, one of KEโs largest shareholders.
โK-Electric has pulled out from Expression of Interest (EOI) of Fescoโs privatisation,โ KEโs spokesperson confirmed while contacting Dawn. He said the company made this decision because the audited financial statement of the Disco was not available because MYT is pending from the companyโs side.
โWe are still very much committed to pursue opportunities that can maximise value for our stakeholders,โ he said.
However, the Jiang Xi Electric Power Construction Company of China failed to qualify for pre-qualification as it submitted the EOI in Chinese language instead of English on the last day of deadline, after being asked several times to do so.
The board meeting chaired by Prime Ministerโs Adviser on Privatisation and Chairman of Privatisation Commission Muhammad Ali approved all other prospective bidders for pre-qualification process to the next stage. It was told to the board that in total 12 EOIs have been submitted for Fesco.
After considering all of the submissions in accordance with the approved pre-qualification criteria, the financial adviser recommended for pre-qualification of 10 IPs. These include three companies of Turkiye, namely Aktor Elektrik Enerji Yatฤฑrฤฑmlarฤฑ San ve Tic Aล, Genvera Enerji Aล (Celik Group) and Cengiz Enerji Sanayii ve Ticaret Aล.
Rest seven Pakistani groups are Engro Energy Limited; Sapphire Fibres Limited, Hub Power Holdings, Lucky Cement and Metro Ventures; Shirazi Investments (Pvt) Limited (Atlas Group); Maple Leaf Cement and Kohinoor Textile; Pakgen Limited Consortium (Nishat Mills, Nishat Power, Nishat Chunian, Lalpir, Pak Elektron Ltd and Kohinoor Energy); and Artistic Milliners (Private) Limited.
It is now time for the shortlisted candidates to move to the next phase of the deal following approval of the process including access to the Virtual Data Room (VDR) for buy-side due diligence. Approval was also given by the board on the reconstitution of the committees for audit & risk, human resources, investment and legal matters.
According to the commission, privatisation of Disco Batch I will result in efficient and modernised power distribution, better customer services, reduced losses and sustainable power sector.
This process will eventually lead to a competitive electricity distribution system with affordable and reliable power for consumers, it added.
It should be noted that Fesco is one of the three electricity distribution companies included in Disco Batch I privatisation along with Gujranwala Electric Power Company (Gepco), receiving eleven expressions of interests, most of them bidding for Fesco and Islamabad Electric Supply Company (Iesco). Submission of expressions of interest for Iesco is scheduled until September 7, 2026.
Privatisation Commission has assured of open, transparent and competitive privatisation process in the best interest of the people and federal government’s power sector reform policy.
Just this week, the NEPRA set out sweeping guaranteed performance and total performance standards for the DisCos after more than two decades, even if they enter the private sector through the ongoing privatization exercise.
These new Performance Standards (Distribution) Regulations 2026 have been put forward by the regulator after almost two years of consultations with stakeholders and replace the Discos Performance Rules 2005.
The new performance standards will, for the first time, require utilities to compensate consumers along with huge fines if they do not restore electricity within specified timelines after interruptions, repair defective meters, solve problems of voltage irregularities, and other such issues.
Ten Investors Clear the Prequalification Stage
With K-Electric no longer in the running, there are 10 investors that have now passed through the process.
The prequalified investors include three Turkish firms and some of the leading Pakistani business conglomerates with interests in energy, manufacturing, textiles, cement, power and investments.
These Turkish firms include:
- Aktor Elektrik Enerji Yatฤฑrฤฑmlarฤฑ San ve Tic Aล
- Genvera Enerji Aล affiliated with the Celik Group
- Cengiz Enerji Sanayii ve Ticaret Aล
One of the reasons why the inclusion of Turkish investors stands out is due to the fact that involvement from abroad was one of the major aims of the government’s plan for privatizing state owned electricity distribution companies.
The Pakistani firms that have now been approved for the second round include Engro Energy Limited; Sapphire Fibres Limited, Hub Power Holdings, Lucky Cement and Metro Ventures; Shirazi Investments (Pvt) Limited from the Atlas Group; Maple Leaf Cement and Kohinoor Textile; the Pakgen Limited Consortium and Artistic Milliners (Private) Limited.
The Pakgen consortium includes a number of leading Pakistani firms such as Nishat Mills, Nishat Power, Nishat Chunian, Lalpir, Pak Elektron and Kohinoor Energy.
Government Pushes Ahead With Disco Privatisation
The privatisation plan involving Fesco is only a segment of the governmentโs plans to privatise certain electric distribution companies.
Recently, the Prime Minister Shehbaz Sharif instructed the concerned officials to develop an appropriate strategy that would ensure that foreign investors are attracted towards the privatisation process.
In addition to this, there is a need for the restructuring of the Privatisation Commission.
This initiative has come at a time when the country faces several difficulties within the power sector.
There are a number of financial burdens associated with the power sector circular debt and inefficient recoveries.
Several government initiatives have been made to resolve the issues, however, they have not been able to do so because of certain regulatory, financial and political constraints.
The privatisation programme is one of the latest moves to solve the problems within the sector.
Competition Could Improve the Transaction
The involvement of ten prequalified investors makes the government face a potential competition environment.
The larger the number of bidders, the easier it becomes for them to get a market value assessment for the transaction as long as the transaction takes place in a completely transparent way and investors continue to participate until the end.
The fact that Turkish companies are participating in the transaction adds an international perspective to it while the participation of important Pakistani industrial houses adds the domestic element in it.
Now investors will have to carry out their due diligence work before making their final bids.
Some investors may even pull out of the race if they find that the situation at the company does not fulfill their expectations.
It will thus be important for the government to keep the investors interested in this transaction process.
Chinese Bidder Misses Prequalification
The omission of Jiang Xi Electric Power Construction again illustrates the significance of following the formalities of the process of privatization.
This Chinese company had presented its EOI in Chinese language on the last day of the deadline although the request was to send it in English language.
Since the bid did not meet the required formalities, this company was not pre-qualified.
Although this case may seem formalistic in nature, but in a transaction that involves many investors and financial advisors among others, these formalities do matter a lot.
A Critical Test for Pakistanโs Energy Reforms
The Fesco privatisation will certainly be under close watch since this is not simply a case of the sale of a single power distribution utility.
The power sector in Pakistan has faced structural problems and ineffectiveness for many years already, and the performance of Dispos has been directly linked to the viability of the whole electricity supply chain.
Should the government manage to find reliable investors and ensure proper changes after privatisation, Fesco might become a good example for further reforms.
In turn, poor implementation, lack of sufficient investments or regulatory oversight would shake people’s trust in the programme.
Thus, the government is making a firm commitment to conducting an open, transparent and competitive process of privatisation.
For the investors, the next step will be to gain an understanding of the actual state of affairs at Fesco. For policymakers, it will be to conduct a deal that would benefit both sides but at the same time would protect consumers.
Now that the due diligence process has begun for 10 prequalified parties, all eyes will be on the valuation of Fesco, the investment plans and finally the bidding process.
The decision of K-Electric to withdraw from the deal has affected the nature of the competition but has not stopped the government’s efforts to reform the distribution system in Pakistan.
Since Fesco, Gepco and Iesco have become the first big group of Dispo privatisation, the outcome of the transactions may affect the future direction of the country’s power industry for years.
