Privatisation Commission Signs Financial Advisory Deal for HESCO & SEPCO – Full Details
The Privatisation Commission of Pakistan has taken another major step in the country’s ongoing power sector reforms by signing a Financial Advisory Services Agreement (FASA) for the privatisation of two major electricity distribution companies:
Hyderabad Electric Supply Company (HESCO) and Sukkur Electric Power Company (SEPCO).
The agreement, signed on 27 November 2025 in Islamabad, appoints Raiffeisen Investment Finansal Danismanlik Hizmetleri Limited Sirketi as the official Financial Adviser (FA). The deal marks a significant milestone in the government’s plan to restructure and privatise inefficient DISCOS under the broader power sector transformation framework.
This article explains the full details, objectives, background, benefits, timeline, and expected impact of the privatisation move—along with the Google-searched keywords, headings, and SEO-friendly content you requested.
Why the Government is Privatising HESCO and SEPCO
Pakistan’s distribution companies (DISCOs) have long suffered from chronic inefficiencies such as:
- High line losses
- Poor bill recovery rates
- Overstaffing and political interference
- Ageing infrastructure and theft
- Huge financial losses adding to circular debt
HESCO and SEPCO are among the worst-performing DISCOs, with some of the highest Transmission & Distribution (T&D) losses in the country.
To tackle these issues, the government has adopted a strategy to bring private sector participation into the power distribution system through the privatisation of DISCOs.
This plan is aligned with:
- IMF conditions
- Energy-sector reforms under the SIFC
- Government’s commitment to reducing circular debt
- Improving service delivery and efficiency
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What the Newly Signed Advisory Agreement Means
The newly signed FASA appoints Raiffeisen Investment as the sell-side Financial Adviser. This means Raiffeisen will:
- Conduct sell-side due diligence
- Analyse the financial, technical, and operational structures of HESCO & SEPCO
- Prepare all necessary documentation for investors
- Conduct market sounding
- Engage with potential local and international investors
- Assist in valuation, transaction structuring, and final bidding
- Support transparent and competitive bidding under Pakistan’s privatisation rules
The appointment came after a competitive bidding process among several global advisory firms. Raiffeisen emerged as the top-ranked bidder.
Privatisation of First Batch of DISCOs Already Underway
Before HESCO and SEPCO, the government had already started privatisation work on the first batch of DISCOs, including:
- Islamabad Electric Supply Company (IESCO)
- Gujranwala Electric Power Company (GEPCO)
- Faisalabad Electric Supply Company (FESCO)
These three companies are considered the “relatively better-performing” DISCOs, and work on their privatisation is already in progress.
With HESCO and SEPCO added to the second batch, Pakistan has now accelerated the reforms needed to improve the national power distribution network.
Why HESCO and SEPCO Need Privatisation the Most
These two companies serve some of the most challenging areas in Pakistan:
HESCO – Hyderabad & Surrounding Regions
- Supplies electricity to urban and rural Sindh
- High line losses due to kunda connections, infrastructure decay, and theft
- Financial losses continue to rise every quarter
SEPCO – Sukkur, Larkana & Northern Sindh
- One of Pakistan’s most loss-making DISCOs
- Low recovery rates
- Poor transformer maintenance
- Heavy load-shedding complaints
Both distribution companies contribute heavily to Pakistan’s power sector losses.
Bringing in experienced private operators or investors is expected to:
- Improve revenue collection
- Reduce electricity theft
- Modernize the grid
- Improve customer service
- Reduce political interference
- Lower the financial burden on the government
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What Will the Financial Adviser Do?
Raiffeisen Investment will play a crucial role in every step of the process. Their responsibilities include:
1. Complete Sell-Side Due Diligence
Understanding the existing operational, legal, and financial position of each company.
2. Prepare Transaction Structure
Recommending whether the DISCOs should be sold fully, partially, or through a concession model.
3. Identify Local & Foreign Investors
Including:
- Global energy companies
- Pakistani private sector players
- International power firms
- Regional utilities
4. Support Government in Pricing & Valuation
Ensuring transparency and fairness.
5. Conduct The Bidding Process
Manage investor data rooms, site visits, evaluations, and negotiations.
Government’s Strategy Behind This Move
Adviser to the Prime Minister on Privatisation, Muhammad Ali, stated that Pakistan aims to:
- Improve power distribution
- Reduce load-shedding
- Cut down circular debt
- Bring better governance into the system
- Reduce financial losses
- Strengthen investor confidence
- Improve service delivery for millions of consumers
He added that hiring a top-ranked international financial adviser is essential for ensuring:
- Transparent process
- Value maximization
- Qualified investor participation
- Strong economic outcomes
How the Privatisation Will Benefit Consumers
Many Pakistanis ask how privatisation will impact their electricity supply. Here is what officials expect:
✔ Better Service Quality
Private operators tend to be more efficient and consumer-focused.
✔ Quick Complaint Resolution
Faster helpline response, mobile apps, and improved customer centres.
✔ Lower Line Losses
Better technology, outsourced operations, and strong monitoring reduce losses.
✔ More Reliable System
Investment in new infrastructure and smart meters.
✔ Reduced Load-Shedding in Target Areas
Higher recovery areas will get uninterrupted power.
How It Will Affect Government Finances
Privatising DISCOs like HESCO and SEPCO can reduce Pakistan’s financial burden significantly:
- Lower federal subsidies
- Lower transmission & distribution losses
- Reduction in circular debt
- Reduced government borrowing
- Savings from operational inefficiencies
- New investments into the system
International lenders such as the IMF have repeatedly urged Pakistan to improve its power sector efficiency—privatisation is a part of this long-term solution.
Challenges Expected in Privatisation
Like any major policy shift, risks exist:
- Consumer resistance to private ownership
- Political pressure
- Labour unions opposing job restructuring
- Weak investor appetite
- Legal challenges
- Regional power theft issues
The financial adviser will play a critical role in managing these concerns.
Potential Timeline for HESCO & SEPCO Privatisation
Although exact dates will depend on the government’s progress, the typical timeline is:
- Due Diligence – 3 to 6 months
- Transaction structuring – 2 to 3 months
- Investor engagement – 4 to 6 months
- Bidding process – 2 to 3 months
- Completion – 1 to 2 months
If all goes smoothly, Pakistan could complete the privatisation by late 2026.
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Conclusion About HESCO SEPCO Privatisation:
The signing of the Financial Advisory Services Agreement with Raiffeisen Investment is a major advancement in Pakistan’s broader power-sector transformation strategy. The government aims to modernize inefficient DISCOs, reduce losses, improve electricity service delivery, and attract foreign investment through transparent and structured privatisation.
If executed carefully, the privatisation of HESCO and SEPCO could significantly improve power distribution across Sindh and contribute to reducing Pakistan’s long-standing circular debt crisis.
Frequently Asked Questions (FAQs)
1. What is the purpose of the agreement signed for HESCO and SEPCO?
The agreement aims to begin the privatisation process of HESCO and SEPCO by bringing in a financial adviser who will guide the entire process from due diligence to investor engagement and bidding.
2. Who has been selected as the Financial Adviser for the privatisation?
Raiffeisen Investment Finansal Danismanlik Hizmetleri Limited Sirketi has been selected as the financial adviser through a competitive bidding process.
3. What role will Raiffeisen Investment play in the privatisation process?
Raiffeisen Investment will perform due diligence, market sounding, investor engagement, transaction structuring, and management of the competitive bidding process.
4. Why are HESCO and SEPCO being privatised?
The government plans to privatise HESCO and SEPCO to improve service delivery, reduce losses, enhance governance, and bring financial sustainability to electricity distribution.
5. Which DISCOs are part of the first batch of privatisation?
The first batch includes:
Islamabad Electric Supply Company (IESCO)
Gujranwala Electric Power Company (GEPCO)
Faisalabad Electric Supply Company (FESCO)
