The federal government has decided to proceed with the privatization of Lahore Electric Supply Company (LESCO) and Multan Electric Power Company (MEPCO) in their existing organizational structures, setting aside a proposal to divide the two major power distribution companies into smaller entities before their sale.
The decision follows a detailed assessment by a Technical Committee established by the Privatization Commission to examine whether LESCO and MEPCO should be split into two or three separate distribution companies ahead of the privatization process.
After reviewing the potential advantages and disadvantages of the proposed restructuring, the committee concluded that bifurcation could complicate and significantly delay the transaction process. It therefore recommended that both distribution companies should be offered for private sector participation without prior division.
The committee was headed by Sajid Akram, Advisor for Power at the Privatization Commission, and included representatives from the Privatization Commission, Power Division, National Electric Power Regulatory Authority (NEPRA) and Power Planning and Monitoring Company.
Its mandate was to evaluate the proposed restructuring in light of the National Electricity Plan, the country’s power policy framework and the government’s broader privatization strategy. The committee also considered whether splitting the companies would deliver sufficient operational and financial benefits to justify the additional time and administrative requirements.
Financial Adviser to Be Appointed
Following the committee’s recommendation, the Privatization Commission has also moved toward the next stage of the process by deciding to appoint a Financial Adviser for private sector participation in LESCO and MEPCO.
Interested financial advisory firms and consortiums with relevant experience in major transactions have been invited to participate. The commission has made the Request for Proposal (RFP) package available to eligible parties as it seeks professional assistance for the proposed transactions.
The appointment of the Financial Adviser is expected to help the government assess the companies, structure the transactions and develop a strategy for attracting private-sector investment.
MEPCO Serves 8.76 Million Consumers
MEPCO is the largest electricity distribution company in Pakistan in terms of its consumer base. It supplies electricity to approximately 8.76 million consumers across 13 administrative districts in southern Punjab.
The company operates an extensive distribution network covering more than 82,000 kilometres, supported by over 780 grid stations. Its large geographical footprint makes its potential privatization one of the major transactions in the government’s ongoing efforts to reform the power distribution sector.
LESCO Has More Than 7 Million Consumers
LESCO, meanwhile, provides electricity to around 7.05 million consumers in Lahore and surrounding districts, including Kasur, Sheikhupura, Nankana Sahib and Okara.
The company’s operations are organized into eight circles and 41 divisions, giving it a substantial presence across some of Punjab’s most densely populated and economically active areas.
The government’s decision to retain LESCO in its present structure means that the company will move toward privatization without undergoing the additional administrative and operational changes that would have been required under a bifurcation plan.
Theft and Line Losses Remain Major Challenges
Despite their large customer bases and extensive infrastructure, both LESCO and MEPCO continue to face persistent challenges, particularly electricity theft, distribution losses and weak recoveries.
According to the relevant assessment, the performance of the two companies has remained comparatively weaker than that of some other distribution companies operating in Punjab. These issues have remained a major concern for the power sector because higher losses and poor bill recovery contribute to financial pressures across the electricity supply chain.
The companies have nevertheless been undertaking modernization initiatives aimed at improving efficiency and strengthening revenue collection.
LESCO has been working on the introduction of Advanced Metering Infrastructure, digital billing and other technology-based measures. The company has set a target of shifting its consumer base toward smart metering by 2029.
MEPCO has also been pursuing modernization of its distribution network, including smart-metering initiatives and digital billing systems. These measures are intended to improve billing accuracy, reduce losses, strengthen recoveries and provide consumers with more transparent electricity services.
FY2024-25 Performance Under Scrutiny
The FY2024-25 audit findings showed that the overall performance of both companies remained unsatisfactory, highlighting the operational and financial challenges that the government will need to address as the privatization process moves forward.
Rather than spending additional time restructuring the companies before seeking private investment, the government has opted to proceed with LESCO and MEPCO in their current form.
Officials and policymakers believe this approach could help avoid the administrative complications associated with creating new distribution entities, including the division of assets, employees, customer bases, infrastructure and financial responsibilities.
The decision is also expected to keep the privatization timetable on track. By avoiding bifurcation, the government can now focus on appointing the Financial Adviser, preparing the companies for private sector participation and determining the most suitable transaction structure.
The move represents another step in the government’s broader effort to reform Pakistan’s electricity distribution sector, where high losses, electricity theft, weak recoveries and financial inefficiencies have remained longstanding issues.
