LAHORE: A strong investor interest in the planned privatisation of three power distribution companies could translate into actual bids only if the government provides longer tariff guarantees, protection against regulatory reversals and greater freedom to operate in the electricity market.

The demands were highlighted in an investor feedback report prepared for the Privatisation Commission following roadshows held in Pakistan, Turkiye, Saudi Arabia and China in June and July for the proposed sale of Fesco, Gepco and Iesco. Potential investors warned that uncertainty on these fronts could undermine the planned privatisation.

The strongest demand was for a longer multi-year tariff (MYT) regime. Investors want the tariff control period extended to 7-10 years, saying the existing 5-year framework is too short to support investment in long-lived distribution assets.

They also want the uniform tariff system gradually replaced with tariffs linked to individual Disco performance and efficiency. Investors argue that the current arrangement can penalise better-performing companies and have sought incentives to reduce transmission and distribution losses and improve service reliability.

Investors demand longer tariffs, regulatory certainty, buying freedom

Regulatory predictability was another major concern. International investors fear that tariffs and contractual arrangements agreed at the time of privatisation could later be reopened by a government or court. They have therefore sought contractual safeguards against such changes and want key investment plans, capital expenditure requirements, and tariff details to be settled before bidding.

Investors have also questioned the capacity and speed of the power regulator, calling for timely tariff decisions, accountable service standards and clearly defined enforcement and intervention powers. Domestic investors have additionally sought contractual limits on regulatory discretion.

Ownership rules are another issue. Most investors favour full ownership of the Discos, while several want permission to acquire stakes in more than one company, subject to safeguards against excessive concentration.

Some investors suggested retaining a minority government stake in Islamabad Electric Supply Company because of its large base of government consumers.

Investors also want greater freedom to buy electricity from competitive suppliers, and they have opposed saddling privatised Discos with costly legacy IPP obligations as consumers shift to cheaper electricity sources.

They see additional revenue opportunities in Disco assets and customer networks, including telecom infrastructure, EV charging and smart metering, but want clear rules governing such businesses and the sharing of resulting revenues.

Delayed government subsidies, particularly those owed in connection with Azad Jammu and Kashmir, were flagged as a serious cash-flow risk. Investors want an automated settlement mechanism, compensation for delays and a defined dispute-resolution process.

Foreign investors have also raised concerns about exchange-rate risks on overseas borrowing for capital expenditure and dividend repatriation.The feedback suggests that investor interest in Fesco, Gepco and Iesco is real, but turning that interest into competitive bids will depend on whether the government can provide a credible and predictable framework before the privatisation process moves to the bidding stage.

Published in Dawn, August 6th, 2026