Pakistan Starts Global Campaign to Sell 3 Major Power Companies

Pakistan has launched an international campaign to attract foreign investors for the privatization of three major power distribution companies, even as concerns over unpaid dues to Chinese power producers threaten to complicate the process.

A government delegation led by Prime Minister’s Adviser on Privatization Muhammad Ali has begun visits to Türkiye and will also travel to China and Saudi Arabia to market the privatization of Islamabad Electric Supply Company (IESCO), Faisalabad Electric Supply Company (FESCO), and Gujranwala Electric Power Company (GEPCO).

The outreach comes as Pakistan pushes ahead with reforms in the power sector aimed at reducing losses, improving efficiency, and attracting private investment.

However, Muhammad Ali acknowledged that outstanding payments owed to Chinese Independent Power Producers (IPPs) under the China-Pakistan Economic Corridor (CPEC) could become a major concern for potential investors.

According to official estimates, the Central Power Purchasing Agency (CPPA-G) currently owes around Rs. 560 billion to Chinese IPPs, largely because of persistent circular debt and poor recoveries by distribution companies.

Ali said the government plans to reassure investors by allowing outstanding dues to be adjusted against future payments owed to government entities and by structuring privatization transactions to safeguard investor interests.

The government is also seeking to settle power sector liabilities through a Rs. 1.225 trillion financing facility arranged with 18 commercial banks. However, progress has been slow as Chinese IPPs have reportedly declined to offer payment discounts similar to those accepted by other power producers, saying such decisions require approval from authorities in Beijing.

Officials said discussions on contract renegotiations and payment issues were also held during recent visits by Finance Minister Muhammad Aurangzeb and Power Minister Awais Leghari to China, but no breakthrough has yet been achieved.