ISLAMABAD: To attract bidders for the successful privatisation of distribution companies (Discos) and allay concerns about contract sanctity, the government is expediting measures to improve regulatory predictability and considering political risk guarantees from multilateral agencies.

Informed sources told Dawn that the reopening of independent power producers’ (IPPs) contracts and recent legal developments involving K-Electric had heightened risk perception among prospective bidders — both local and foreign — currently undertaking due diligence of the first batch of Discos.

They have stressed the need for binding legal guarantees and clear financial risk allocation to prevent post-privatisation contractual disputes, and demanded longer licence tenures than the existing 20-year term for Discos.

Interestingly, the prime minister’s adviser on privatisation, Muhammad Ali — who was involved in renegotiations with IPPs that led to revised contracts during the PTI and PML-N tenures — now faces questions from prospective investors over regulatory and contractual guarantees.

Bidders seek binding guarantees, risk cover amid fears of contract reopening

Against this backdrop, Finance Minister Muhammad Aurangzeb on Wednesday presided over a meeting of the Steering Committee on Power Sector Regulatory Regime and Reform Options to advance reforms to strengthen the power sector’s regulatory framework and promote efficiency, investment, competition and greater private-sector participation.

The finance minister noted that the evolving power sector landscape required a regulatory framework capable of responding to technological developments while supporting efficiency, investment, consumer interests and greater private-sector participation, an official statement said.

The meeting coincided with a stay order on Wednesday from the Sindh High Court against recent decision of the National Electric Power Regulatory Authority (Nepra) and its appellant tribunal regarding K-Electric’s Multi-Year Tariff (MYT) that effectively curtailed federal government’s subsidy to KE worth around Rs200 billion. Aggrieved by the appellant tribunal and Nepra decision, KE had challenged it in SHC which suspended those notifications and orders and issued notices to the respondents for next date of hearing on Oct 15.

The finance minister-led committee discussed Pakistan’s power sector transformation and discussed the significant changes taking place in the industry, including growing solarisation and changing demand patterns. “The committee discussed key structural and emerging challenges facing the sector, including legacy capacity obligations, changing grid-demand patterns, service quality, investment constraints and the need to further strengthen incentives for efficiency”, an official statement said.

“The discussion also focused on improving regulatory predictability, better targeting of subsidies and strengthening the overall investment climate to support a more efficient, competitive and financially sustainable power sector”, the statement added.

The minister called for developing a market structure that provides clearer incentives for efficiency and service quality, while creating greater space for competition, private-sector participation and investment.

Published in Dawn, October 8th, 2026