12 groups show interest in Fesco

Mansha, Saigal, Tabba families among 12 groups vying for stake in power utility

ISLAMABAD:

Pakistan's richer families doing business in energy, textile, automobile and cement have shown interest in acquiring a profitable Faisalabad Electric Supply Company (Fesco) along with four foreign firms, offering another opportunity to the government after a decade to start selling these assets.

About 12 groups, eight of them Pakistani well-connected and rich families, have submitted expressions of interest for acquiring majority stakes in Fesco, according to details released by the Privatisation Commission on Friday at the expiry of the extended deadline.

The federal cabinet has authorised the sale of the majority to all stakes of the country's three profitable power distribution companies.

The Privatisation Commission said three Turkish, one Chinese and eight local groups have shown interest in acquiring Fesco, which supplies electricity to Pakistan's third most populated city and its textile hub.

It is the first serious attempt after one decade to sell the company after the Pakistan Muslim League-Nawaz (PML-N) government scrapped the process in 2016 just before the bidding stage.

A consortium of Nishat Mills of Pakistan's one of the richest persons Mian Mohammad Mansha and Pak Elektron Ltd owned by the Saigal family has also submitted expressions of interest. Mian Mansha was also part of the last bidding process of 2015-16.

Maple Leaf Cement and Kohinoor Textile of the Saigal family have also separately submitted the papers.

Among the Turkish companies are Aktor Elektrik Enerji Yat?r?mlar, Genvera Enerji A (Celik Group) and Cengiz Enerji Sanayii ve Ticaret A. A Chinese company, Jiang Xi Electric Power Construction, has also shown interest.

One of the reasons for getting a good response to the first major step was that the technically and financially qualified firms can also bid for other two companies, Gujranwala and Islamabad, in case they cannot win Fesco.

Among the prominent Pakistani groups are Engro Energy Limited, owned by the Dawood family that runs multiple businesses. The Abdullah family's Sapphire Fibers Limited has also shown interest in the acquisition.

Another one of the richest groups having deep stakes in the power sector, Hub Power Holdings of the Habibullah Khan family, and Lucky Cement of Mohammad Ali Tabba family have also shown interest. Lucky Cement was the runner-up in the PIA privatisation transaction.

The Shirazi Investments (Pvt) Limited, which also has stakes in the automobile sector, has also submitted the document to participate in the process.

Artistic Milliners (Private) Limited – Pakistan, owned by the Yaqoob family, has also expressed interest in the acquisition of the power sector firms.

K-Electric Limited, the country's largest integrated power distribution and generation company, has also submitted the documents. The Saudi and Kuwaiti shareholders of K-Electric have taken the government to international arbitration for blocking $1.7 billion Chinese investment in the company.

However, there have also been concerns over the government's proposal to guarantee a minimum 13% return to investors, which would promote inefficiency and reduce technological advancement. Any decision to continue with uniformed electricity pricing across the country post-privatisation would also keep the subsidy burden on the budget.

This is an important milestone in the privatisation of Discos. The strong response to Fesco reflects investor confidence in the potential of Pakistan's electricity distribution sector and in the government's commitment to a transparent, competitive and professionally managed process, said Muhammad Ali, Adviser to the Prime Minister on Privatisation and Chairman, Privatisation Commission.

He said the commission now looks forward to engaging constructively with the prequalified investors through the due-diligence process and discussing the contours of the post-privatisation regime.

The privatisation is intended to improve operational efficiency, modernise distribution infrastructure, strengthen customer service, reduce losses and support a more financially sustainable power sector. Over time, these measures will help create the conditions for more competitive electricity distribution and affordable, reliable power for consumers, he added.

The expressions of interest and statements of qualification (SOQs) submitted by the interested parties will now undergo an evaluation against the approved prequalification criteria. Applicants meeting the prescribed requirements will be prequalified and invited to the next stage of the transaction, where they will be granted access to the virtual data room (VDR) to undertake detailed buy-side due diligence.

Fesco is among the three electricity distribution companies in Discos Batch-I, alongside Gujranwala Electric Power Company (Gepco) and Islamabad Electric Supply Company (Iesco). The deadlines for submission of EOIs for Gepco and Iesco are 21 August 2026 and 7 September 2026, respectively.

As of June last year, the total assets of Fesco amounted to Rs410.3 billion as compared to Rs347 billion worth of liabilities. The company had a net positive equity of Rs63 billion, which jumped 28% because of the deposit for shares and asset revaluation gains, according to the Central Monitoring Unit (CMU) of the finance ministry.

Fesco had non-current liabilities of Rs217.6 billion, as the staff retirement benefits remained a major component at Rs123 billion, according to the CMU. Current liabilities were estimated at Rs130 billion, including trade payables of Rs118 billion. Fesco's profit after tax was Rs9.4 billion.