Government Seeks Foreign Investors for Power Sector Reform
Pakistan has started an international campaign to attract foreign investors for the privatization of three major power distribution companies.
The government is looking to privatize Islamabad Electric Supply Company, Faisalabad Electric Supply Company, and Gujranwala Electric Power Company.
A delegation led by Prime Minister’s Adviser on Privatization Muhammad Ali has begun meetings in Türkiye. The delegation will also visit China and Saudi Arabia as part of the campaign.
The purpose of the visits is to market the three power distribution companies to potential foreign investors. The government wants to bring private sector participation into the power sector.
Officials believe privatization can help reduce losses and improve service delivery. The plan is also aimed at improving recoveries and strengthening financial discipline in distribution companies.
Pakistan’s power sector has faced serious challenges for years. These include circular debt, poor recovery rates, line losses, and weak management systems. The government now wants private investment to support long-term reforms.
Chinese IPP Dues May Raise Investor Concerns
The privatization campaign comes at a sensitive time. Pakistan still owes large payments to Chinese Independent Power Producers under the China-Pakistan Economic Corridor.
Muhammad Ali acknowledged that these unpaid dues could become a major concern for investors. He said the government is working to address the issue before completing privatization transactions.
According to official estimates, the Central Power Purchasing Agency currently owes around Rs. 560 billion to Chinese power producers. These dues have increased due to circular debt and weak recoveries by distribution companies.
The government plans to reassure investors through payment adjustment mechanisms. Outstanding dues may be adjusted against future payments owed to government entities.
Officials said the privatization structure will be designed to protect investor interests. The government wants to make the process attractive and credible for international buyers.
Pakistan Works on Power Sector Liabilities
Pakistan is also trying to settle power sector liabilities through a Rs. 1.225 trillion financing facility. The facility has been arranged with 18 commercial banks.
However, progress has remained slow. Chinese power producers have reportedly refused to offer payment discounts similar to those accepted by other producers.
They have maintained that such decisions need approval from authorities in Beijing.
Officials said payment issues and contract renegotiations were discussed during recent visits by Finance Minister Muhammad Aurangzeb and Power Minister Awais Leghari to China.
So far, no major breakthrough has been achieved.
The success of the privatization campaign will depend on investor confidence. It will also depend on how quickly Pakistan resolves power sector debt and payment concerns.
