The Cabinet Committee on Privatisation (CCoP) has approved the restructuring plan for the first batch of Pakistan’s electricity distribution companies, covering Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO) and Islamabad Electric Supply Company (IESCO). The decision marks a significant step in the government’s ongoing power sector reform programme, which seeks to establish financially sustainable, professionally managed and digitally enabled distribution companies capable of delivering improved services to households, businesses and industrial consumers. The approval is part of a broader government effort to address structural and financial challenges affecting the power distribution sector while improving the operational performance of distribution companies.
The meeting of the CCoP was chaired by the Deputy Prime Minister, with the restructuring decision forming part of wider efforts to strengthen the country’s electricity distribution system. Under the approved plan, selected assets and liabilities of FESCO, GEPCO and IESCO will be separated through a restructuring arrangement. All land parcels among the selected assets, along with selected liabilities including post-retirement benefits of employees who have already retired and a material amount of associated funds, will be carved out and transferred into a Special Purpose Vehicle (SPV) owned by the Government of Pakistan. The arrangement is intended to separate certain legacy obligations from the operating distribution companies and create a clearer structure for their future management.
The restructuring plan also sets out arrangements for the retirement benefits of employees who are currently serving. Unlike the benefits of already retired employees that will be included among the liabilities transferred to the government owned SPV, retirement benefits of serving employees will continue to remain with the respective DISCOs. The government has also decided that inter-governmental receivables and payables will be netted off as part of the restructuring process. This mechanism is intended to settle amounts owed to the Government of Pakistan and provide greater clarity regarding the financial position of the companies as they move toward the next stage of reform.
According to the government, the restructuring plan has been designed to remain fiscally neutral while enhancing value for the Government of Pakistan and ensuring that the transaction remains commercially viable. The approach is aimed at addressing legacy constraints without creating an additional fiscal burden through the restructuring process. By separating selected assets and liabilities and clarifying financial obligations, the government intends to create a more suitable foundation for the future operation and potential transformation of the three distribution companies.
The government has also emphasized that consumers, employees, industry and local communities have a direct stake in the restructuring process. Service continuity will remain a priority as the reforms move forward, with the authorities seeking to ensure that consumers continue to receive electricity services throughout the transition. Employee interests will be addressed according to applicable laws and the arrangements finalized as part of the transaction. The government has further stated that relevant stakeholders will continue to be informed as the restructuring process advances and additional stages are completed.
Advisor to the Prime Minister on Privatisation Muhammad Ali said consumers would remain protected under Pakistan’s existing regulatory framework. He noted that electricity tariffs would continue to be determined through the applicable process of National Electric Power Regulatory Authority (NEPRA) and subsequently notified by the government. The government has indicated that the restructuring exercise is not intended to change the established regulatory mechanism for electricity tariffs, while the broader reform programme will focus on improving the performance of the distribution companies.
The restructuring initiative is also expected to place greater emphasis on measurable improvements in electricity reliability, operational efficiency and customer service. The government’s reform agenda seeks to move the distribution companies toward more professionally managed and accountable operating structures, supported by digital systems and improved management practices. These changes are expected to be important for addressing long standing challenges within the power distribution network and improving the quality of services provided to consumers.
FESCO, GEPCO and IESCO collectively serve more than 14 million consumers across major industrial, commercial and urban centres of Pakistan. Their performance therefore has a direct impact on households, businesses and industries operating within their respective service areas. Improving the financial and operational performance of these companies is considered important for the government’s wider objective of reducing pressure on the power sector, improving electricity services and supporting more competitive energy costs for Pakistan’s economy.
The approval of the restructuring plan represents an important stage in the government’s power sector reform efforts. By addressing selected legacy assets and liabilities, establishing a government owned SPV for specified obligations and maintaining responsibility for serving employees with the respective DISCOs, the government aims to create a clearer financial and operational structure for FESCO, GEPCO and IESCO. The next stages of the process will involve further implementation of the approved arrangements and continued engagement with employees, consumers, industry and other stakeholders.
The government has positioned the restructuring as a shift away from managing longstanding constraints toward developing modern, accountable and consumer focused electricity distribution companies. With more than 14 million consumers collectively dependent on FESCO, GEPCO and IESCO, the implementation of the plan will remain closely linked to the wider goals of improving reliability, efficiency and customer service while maintaining continuity of electricity supply during the reform process.
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