Reporting snapshot · 5 October 2026 (Asia/Karachi). Pakistan has told the IMF it will sell nine of its ten power distribution companies by the end of December 2027, excluding the chronically loss-making Quetta Electricity Supply Company, [Shahbaz Rana reported in The Express Tribune on 4 October](https://tribune.com.pk/story/2632865/govt-sets-bold-disco-sale-deadline). The deadline is three months later than the December 2026 target the government had set for the first batch, and the Fund has questioned whether the approved transaction structure will actually stop the sector's annual losses. As of the morning of 5 October no other outlet had independently reported the Dec 2027 deadline or the Quetta exclusion; the Finance Ministry's [1 October press release](https://www.finance.gov.pk/press_releases.html) records the parallel message to investors that Turkish and other buyers are interested in DISCO privatisation.
What happened
Pakistan’s Privatisation Commission briefed the IMF this week that the government will sell nine power distribution companies by the end of December 2027 in four batches. The first three “efficient” companies — Faisalabad (Fesco), Gujranwala (Gepco) and Islamabad (Iesco) — will be privatised by the end of March 2027, the Commission spokesman confirmed. The new March 2027 deadline is three months later than the December 2026 target for the same three, which are already at the due-diligence stage.
The Commission told the Fund the second two — Hyderabad (Hesco) and Sukkur (Sepco) — would be sold between April and June 2027, and the third batch of four — Peshawar (Pesco), Hazara (Hazeco), Lahore (Lesco) and Multan (Mepco) — by the end of December 2027. Quetta (Qesco), the single largest fiscal hole, is excluded. The Commission said it is taking advantage of the “healthy momentum” created by the PIA privatisation, whose first financial closing on 29 June transferred control to an Arif Habib-led consortium.
The ten distribution companies together caused Rs299 billion in losses and received Rs551 billion in subsidies in fiscal year 2025, for Rs765 billion of fiscal cost. Qesco caused Rs112 billion in losses and consumed Rs54 billion in subsidy in FY25. The approved mechanism will separate land and pensioner liabilities from the first three companies’ balance sheets; as of June 2025, the pensioner liabilities of those three totalled Rs312 billion, and the three had Rs1.2 trillion of assets against Rs1.05 trillion of liabilities, leaving Rs145 billion of net equity that the government plans to park in a Special Purpose Vehicle (SPV).
The IMF questioned whether the transaction structure would end the budget pressure even after privatisation, and asked what lessons the government had drawn from the 2005 privatisation of K-Electric — the only previously privatised distribution entity — noting that the government had still had to budget Rs163 billion of subsidies for K-Electric this fiscal year. If the multi-year tariff of Rs32.37 per unit that Nepra approved is implemented, the annual subsidy would fall to around Rs120 billion.
The Commission told the Fund the uniform tariff policy will continue after privatisation, and defended the pensioner-liability carve-out by citing the PIA privatisation, where the government parked Rs673 billion of losses in PIA Holding Company — a figure that had risen to Rs817 billion by June. The spokesman disputed the framing, telling Tribune “it is not correct that the IMF has issues with the proposed privatisation structure”.
Why it matters
The Dec 2027 deadline locks in the multi-year path the same IMF review is asking Pakistan to walk while it negotiates the Memorandum of Economic and Financial Policies, the first draft of which Profit by Pakistan Today reported on 3 October was shared the same day. The DISCO privatisation sits inside that package alongside the Rs110 billion NFC-arrears recovery the federal government told the IMF it would deduct from provincial transfers on 4 October and the demand to end the 200-unit electricity cross-subsidy. The energy-reform agenda was first previewed by The Express Tribune on 19 September as a primary agenda item of the fourth review of the $7 billion Extended Fund Facility, which together with the $1.4 billion Resilience and Sustainability Facility would unlock about $1.2 billion in additional disbursements once the Executive Board approves a staff-level agreement.
The most important open question is whether the approved transaction structure will actually stop the losses. The Fund’s central reservation is that continuing the uniform tariff after privatisation means consumers served by Fesco, Gepco and Iesco will continue to subsidise consumers in Qesco, Pesco and Sepco. The PIA precedent has not produced a clean outcome: PIA Holding Company’s losses grew from Rs673 billion to Rs817 billion in roughly twelve months. The Commission’s framing that the model “may reduce the bleeding for the government, but it doesn’t completely stop the building up of losses” implicitly concedes the Fund’s point.
The Finance Minister’s message at the 1 October PSX gong ceremony, recorded in the Finance Ministry press release, was that Turkish investors are interested in DISCOs alongside US investor interest in minerals, agriculture, IT, oil and gas, and refinery upgrades.
What is still uncertain
The most important open question is whether the December 2027 deadline will hold. Tribune’s sources framed it as the government’s plan, not a Fund-endorsed commitment, and the Commission spokesman confirmed only the first-quarter timing for Fesco, Gepco and Iesco. The Fesco-Gepco-Iesco deadline slipped from December 2026 to March 2027 — a reminder that the new four-batch calendar is a planning target.
The IMF is pushing for an end to the 200-unit cross-subsidy in favour of a targeted subsidy through BISP from January 2027, and is asking the government to refrain from any new fuel subsidy — the open thread of the 2 October fuel-subsidy deadlock. The IMF has not yet confirmed whether the next $1.2 billion disbursement will come in November or slip into the next quarter. The Senate Standing Committee on Finance, KhabarWire reported on 25 September, also questioned the government’s strategy for the power distribution companies — a question the Commission now appears to have answered by excluding Qesco. The Rs1.675 trillion power-sector circular debt stock, which KhabarWire noted on 4 October rose by Rs61 billion during the last fiscal year, will continue to accumulate even if the privatisation closes on schedule.
Sources & reporting notes
This is a synthesis of published material, not eyewitness reporting. Sources were reviewed on 5 October 2026 (Asia/Karachi). The December 2027 deadline, the four-batch schedule, the Quetta exclusion, the first-quarter timing for Fesco-Gepco-Iesco, the pensioner-liability SPV, the Rs299 billion loss and Rs551 billion subsidy FY25 totals, the Rs112 billion Qesco loss and Rs54 billion subsidy FY25 figures, the Rs312 billion pensioner liabilities, the Rs1.2 trillion assets and Rs1.05 trillion liabilities of the first three companies as of June 2025, the IMF's concerns about the uniform tariff and the carve-out, the K-Electric comparison with Rs163 billion subsidy and Rs32.37 per unit multi-year tariff, the PIA Holding Company losses rising from Rs673 billion to Rs817 billion, and the Commission spokesman's confirmation of the first-quarter timeline rest on The Express Tribune's 4 October story by Shahbaz Rana. The 19 September fourth-review agenda preview and the original account of investor interest in Iesco, Fesco and Mepco are drawn from The Express Tribune's 19 September story by Irshad Ansari. The Ministry of Finance's 1 October message to investors on Turkish interest in DISCO privatisation is drawn from Ministry of Finance press release PR No. 649. The Ministry of Finance and the IMF have not published the underlying briefing documents.
- The Express Tribune — Govt sets bold DISCO sale deadline4 October 2026 · Shahbaz Rana's bylined account of the December 2027 deadline, the four-batch schedule, the Quetta exclusion, the first-quarter timing for Fesco-Gepco-Iesco, the Rs299 billion loss / Rs551 billion subsidy FY25 totals, the Rs312 billion pensioner liabilities, the IMF's reservations on the uniform tariff and pensioner-liability SPV, the K-Electric comparison with Rs163 billion subsidy and Rs32.37 per unit multi-year tariff, the PIA Holding Company losses rising from Rs673 billion to Rs817 billion, and the Commission spokesman's confirmation of the first-quarter timeline.
- The Express Tribune — IMF talks to focus on reforms, privatisation19 September 2026 · Irshad Ansari's preview of the fourth-review agenda: energy-sector reforms, privatisation and a circular-debt plan; notices inviting expressions of interest for Iesco, Fesco and Mepco; the Rs1,614 billion circular-debt target; and the expected January 2027 revision in the basic electricity tariff.
- Ministry of Finance — Finance Minister at PSX (Press Release No. 649)1 October 2026 · The Finance Minister's address at the PSX gong ceremony marking the Naya Nazimabad Apartments REIT listing, recording Turkish investor interest in DISCO privatisation alongside US investor interest in minerals, agriculture, IT, oil and gas, and refinery upgrades, and the $1.2 billion PIA consortium transaction.
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