Pakistan promises IMF sale of nine power distributors by 2027

Pakistan has told the International Monetary Fund (IMF) it will sell nine state-owned electricity distribution companies by December 2027, The Express Tribune reported on October 4. The Privatisation Commission briefed the lender this week on the plan and on its talks with prospective buyers.

The distributors are a heavy drain on public finances. According to the finance ministry's Central Monitoring Unit, the 10 state power distributors lost PKR299bn ($1.08bn) in fiscal year 2025 and received another PKR551bn in subsidies, bringing the annual cost to PKR850bn. The IMF questioned whether the government's chosen sale model would stop those losses after privatisation.

The first batch of three better-performing companies is now due to be sold by March. The government had earlier aimed to sell them by December this year. Under the revised timetable, Faisalabad Electric Supply Company (Fesco) will be sold in January, Gujranwala Electric Power Company (Gepco) in February and Islamabad Electric Supply Company (Iesco) in March. All three are at the due diligence stage.

A spokesman for the Privatisation Commission said the Hyderabad and Sukkur distributors would follow between April and June. The Peshawar, Hazara, Lahore and Multan companies are targeted for sale by December 2027. Quetta Electric Supply Company, which lost PKR112bn and consumed PKR54bn in subsidies last fiscal year, is excluded from the plan.

Under the approved structure, land and pension liabilities will be removed from the balance sheets of the first three companies and placed in a special purpose vehicle. Pension liabilities for the three stood at PKR312bn as of June 2025.

The government will also keep a single nationwide electricity tariff for both privatised and state-owned distributors. The transactions are "being structured based on a uniform tariff continuing post-privatisation and the investors (have also been) informed about it," said the spokesman for the Privatisation Commission, The Express Tribune.

The IMF asked what lessons the government had drawn from the privatisation of K-Electric, which still receives PKR163bn in subsidies in this year's budget. Commission officials defended the liability carve-out by citing the sale of Pakistan International Airlines, whose parked losses in PIA Holding Company rose from PKR673bn to PKR817bn as of June.