Progress in IMF Talks: Government Shares DISCOs Privatization Plan and Timeline; Completion Targeted by December 2027
ISLAMABAD: The fourth economic review negotiations between Pakistan and the International Monetary Fund (IMF) moved a step closer to success, with the government making a detailed package of privatization of power distribution companies (DISCOs) available.
The first phase is set to complete the process of privatization of Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO) and Islamabad Electric Supply Company (IESCO) by March 2027, official sources said.
The following are some highlights of the IMF Talks and DISCOs Privatization Plan.
The Privatization Schedule involves transferring FESCO from January, GEPCO from February and IESCO from March 2027. Later, in April-June 2027, electric supply companies of Hyderabad and Sukkur will be privatized while Peshawar, Hazara, Lahore and Multan DISCOs will be completed by December 2027. Quetta Electric Supply Company is not part of this phase of privatisation.
The IMF raised serious concerns about the power sector’s massive circular debt of Rs1,675 billion and sought to phase out the cross-subsidization of consumers using up to 200 units. To attract consumers, the government is planning to channel targeted subsidy to those consumers via Benazir Income Support Programme (BISP) from January 2027.
Financial Burden and Subsidies: The government has provided Rs830 billion subsidy to the power sector for the fiscal year 2026–27. The 10 DISCOs suffered from a loss of Rs299 billion in the previous fiscal year and were also subsided by Rs551 billion, thus making their aggregate financial loss of Rs850 billion per year.
Structural Adjustments and Tariff Mechanism: The IMF has also voiced concerns about the proposed privatisation framework, as the government plans to keep the electricity tariff equal across the country after the DISCOs are privatised, so that more profitable consumers will bear the burden of the weaker companies. In addition, the government will break billions of dollars in “legacy dues” into a Special Purpose Vehicle. In absence of a consensus, virtual discussions would follow, followed by a staff level one with the IMF mission which would leave Pakistan in the near future.