Govt offers 20pc returns to woo buyers

<p>ISLAMABAD: Pakistan will offer a lucrative 18-20 per cent return, along with complete freedom for investors to buy and sell electricity in a competitive market, as it targets the privatisation of three of the most viable distribution companies (Discos) in October, November and December.</p> <p>“We will provide in the transaction structure terms and conditions that protect consumer interests but also ensure investor comfort. We will do it upfront as part of transaction structure, before bidding (of the first Disco), otherwise privatisation will not be possible,” Prime Minister’s Adviser on Privatisation Muhammad Ali told Dawn after a meeting of the Privatisation Commission board, which approved a restructuring plan for Faisalabad Electric Supply Company – the first of five Discos to be sold in 2026-27.</p> <p>Mr Ali said the Privatisation Commission had completed domestic soft marketing of three Discos of Faisalabad, Gujranwala and Islamabad in seven major cities, with chambers of commerce and industry and business houses and would now be expanding abroad mainly to Saudi Arabia, China and Turkiye and approaching other Middle Eastern capitals — Qatar, Bahrain, Oman and so on — virtually and through transaction advisers to tap in investors and technical operators. </p> <p>“The privatisation programme needs to be marketed globally,” he said, adding the transactions would be based on financial results as of March 31.</p> <blockquote> <p>Plans to sell profitable Fesco, Gesco and Iesco this year</p> </blockquote> <p>The commission has set July 7 for submission of expressions of interest (EoIs) for Faisalabad, August 24 for Gujranwala and Sept 7 for Islamabad Electric Supply Company. “We will run these three parallel transactions and hold bidding one after the other in October, November and December 2026,” he said, adding the transaction structures would have to be “corrected” before October and “we will do it”.</p> <p>The uniform consumer tariff will continue for the time being, but privatisation, resulting efficiency gains, and the absorption of surplus capacity would reduce the average uniform tariff, he hoped.</p> <p>He said there was robust investor interest in the power sector. However, they wanted an 18pc dollar-based return, an end to uniform consumer tariffs, permission for self-power generation by new owners, freedom for the private sector to ‘buy and sell electricity’, and the government’s exit from the sector. They also wanted 8-10 year tariff visibility, including investment plans.</p> <p>He said the government will not allow dollar-based returns at all. “We will provide rupee-based returns of 14-15pc plus key performance indicators (KPIs) that allow profitability of up to 18-20pc while sharing efficiency gains.” “The existing (tariff and business) model is not exciting. This has to change,” he said, adding that the regulator’s capacity needs to be strengthened for ‘improved supervision and monitoring’ instead of discretionary powers.</p> <p>Alongside these three transactions, the PM’s adviser said that the Sukkur and Hyderabad electric companies would also be restructured and improved to complete their privatisation by August-September next year.</p> <p>The Board of the Privatisation Commission, led by Mr Ali, formally approved the restructuring plan for Fesco. The restructuring plan, prepared by the Financial Adviser, will now be submitted to the Cabinet Committee on Privatisation (CCoP) for approval.</p> <p>The board also approved the consortium led by KPMG, in association with Bridge Factor and other consortium partners, as the highest-ranked bidder for appointment as financial adviser for House Building Finance Company Ltd. To facilitate the next phase of the transaction, the board constituted a Negotiation Committee to finalise the Financial Advisory Services Agreement with the successful consortium.</p> <p>In another important agenda item, the board reviewed the proposed Transaction Advisory Services Agreement with the Asian Development Bank for the outsourcing of operations at Islamabad International Airport, subject to certain changes in conditions.</p> <p>The board appreciated the progress made on the transaction and provided guidance on certain provisions of the proposed agreement, seeking further clarity before its consideration at a subsequent meeting, an official statement said.</p> <p>The proposed transaction envisages engaging a qualified private-sector operator under a long-term concession framework through a transparent and competitive process. The initiative aims to enhance operational efficiency, improve the passenger experience, and align airport services with international best practices.</p> <p><em>Published in Dawn, June 20th, 2026</em></p>