The Privatisation Commission (PC) board proposed on Tuesday the establishment of a new company to set aside some liabilities and assets of three power distribution companies (DISCOs) in line with the privatisation model used for Pakistan International Airlines (PIA), aiming to hand over the entities with positive equity to new buyers.

According to the proposal, the government plans to separate land as an asset and the liabilities of pensioners from the balance sheets of Faisalabad, Gujranwala and Islamabad power distribution companies. As of June 2025, the total liabilities of the retired employees of just three companies were equal to Rs312 billion, which may further jump due to the splitting of balance sheets based on March 2026 results.

In June last year, the total assets of these companies were Rs1.2 trillion compared to liabilities of Rs1.05 trillion, showing a total net positive equity of Rs145 billion. However, the Gujranwala Electric Power Company (Gepco) had a negative equity of Rs14.4 billion as of June 2025 but the provisional figure for March 2026 was unknown, which is the month being used as a base for splitting the balance sheets.

The assets and liabilities are planned to be parked in a Special Purpose Vehicle (SPV). The final number would vary as the board approved the splitting of balance sheets based on audited results for March 2026.

The PC board recommended that the Cabinet Committee on Privatisation (CCoP) approve the restructuring plans and schemes of arrangement for the privatisation of the first batch of DISCOs, namely Faisalabad Electric Supply Company (Fesco), Gepco and Islamabad Electric Supply Company (Iesco), according to an official announcement.

It added that the restructuring plans and schemes of arrangement had been prepared on the basis of audited financial statements of the three DISCOs for the period ended March 31, 2026. The proposed framework is designed to maximise value for the government of Pakistan while ensuring that the transactions remain commercially viable and attractive to the prospective private-sector investors.

The Privatisation Commission said that under the proposed structure, a government-owned SPV would be established to carve out selected assets and liabilities of the three DISCOs, facilitating an efficient and commercially viable transaction.

The government had also divided the balance sheet of PIA, picking over Rs650 billion liabilities to hand over the air carrier with a positive equity to the new buyers.

The PC board was apprised of the strong interest from both domestic and international investors in the privatisation of the first batch of DISCOs. The deadlines for the submission of Expressions of Interest (EOIs) are August 7, 2026 for Fesco; August 21, 2026 for Gepco and September 7, 2026 for Iesco.

As of June last year, the total assets of Fesco amounted to Rs410.3 billion as compared to Rs347 billion worth of liabilities. The company had a net positive equity of Rs63 billion, which jumped 28% because of the deposit for shares and asset revaluation gains, according to the Central Monitoring Unit (CMU) of the finance ministry.

Fesco had non-current liabilities of Rs217.6 billion, as the staff retirement benefits remained a major component at Rs123 billion, according to the CMU. Current liabilities were estimated at Rs130 billion, including trade payables of Rs118 billion. Fesco’s profit after tax was Rs9.4 billion.

Gepco registered a profit after tax of Rs13.7 billion. Its total assets were Rs238 billion but the equity was negative by Rs14.4 billion as of June last year, according to the CMU. Total liabilities were Rs252.5 billion, including the staff retirement benefits of Rs79 billion.

As of June last year, the loss after tax of Iesco was Rs1.42 billion. The company’s total assets were Rs547 billion. Its equity was positive by Rs97 billion due to the deposit for shares of Rs67 billion and surplus revaluation of Rs158 billion. Liabilities were equal to Rs450 billion, including the staff retirement benefits of Rs110 billion and the deferred tax liabilities.

Pakistan has agreed with the International Monetary Fund (IMF) to get rid of at least three DISCOs – a commitment that has been given repeatedly since 2013 but could not be fulfilled.

The last IMF report stated that Pakistan remained committed to full implementation of the power structural reform agenda to reduce costs for residents and businesses in a sustainable fashion. The DISCO private-sector participation process, which would lead to further operational improvements, was proceeding, albeit with a delay, it said.

The report added that the first batch of privatisation of Iesco, Gepco and Fesco had been delayed following feedback from market and investor concerns. The government has now assured the lender that investor concerns have been addressed and it is moving forward, anticipating finalisation by early 2027.