Pakistan has launched an international investor outreach campaign to promote the privatisation of three major power distribution companies (DISCOs), with the government seeking to attract strategic investors from Turkey, China and Saudi Arabia despite ongoing concerns over delayed payments to Chinese Independent Power Producers (IPPs).

The delegation, led by Prime Minister's Adviser on Privatisation Muhammad Ali, is marketing the privatisation of Islamabad Electric Supply Company (IESCO), Faisalabad Electric Supply Company (FESCO) and Gujranwala Electric Power Company (GEPCO).

Muhammad Ali acknowledged that outstanding payments to Chinese IPPs could affect investor confidence but said the government is committed to providing adequate safeguards. He stated that investors would be offered comfort through transparent transaction structures and mechanisms allowing outstanding dues to be adjusted against future government payments.

According to official estimates, the Central Power Purchasing Agency-Guaranteed (CPPA-G) owes nearly Rs560 billion to Chinese IPPs, primarily due to persistent circular debt, low recoveries and inefficiencies in the power distribution system.

The government has proposed settling part of these liabilities through a Rs1.225 trillion financing facility arranged with 18 commercial banks. However, progress has remained limited as Chinese power producers have reportedly declined to offer discounts similar to other IPPs, stating that such decisions require approval from authorities in Beijing.

Pakistani officials have also discussed contract renegotiations and financing options with Chinese counterparts, but negotiations have yet to produce a comprehensive breakthrough.

The success of the DISCO privatisation programme is expected to depend largely on the government's ability to resolve payment disputes, reduce circular debt and provide long-term certainty on contractual and regulatory matters for foreign investors.