ISLAMABAD: The Federal Cabinet has approved the transfer of shares for three Distribution Companies (DISCOs) to the President of Pakistan, as well as the issuance of shares for seven DISCOs to WAPDA, following the completion of the process outlined in the Supplementary Business Transfer Agreement (STBA), sources informed Newzshewz.
On February 14, 2025, the Power Division briefed the Economic Coordination Committee (ECC) that the Government of Pakistan has approved the privatization process for DISCOs. Under this plan, three DISCOs—Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO), and Islamabad Electric Supply Company (IESCO)—will be privatized in the first phase.
At the time of creation of DISCOs, Supplementary Business Transfer Agreements (SBTAs) were signed between WAPDA and DISCOs (except HESCO and SEPCO) which were to be followed with the process transferring the shares in the name of the President of Pakistan, after approval of the Government of Pakistan. So far, only IESCO, LESCO and MEPCO partly completed the process by ‘issuing shares’ to WAPDA but the next step of ‘transfer of shares’ in the name of the President of Pakistan was not undertaken, whereas other DISCOs including FESCO and GEPCO had not been able to take any step. Besides being a mandatory requirement of SECP, it was also a condition precedent to privatization that shares of these DISCOs should be transferred in the name of the President of Pakistan. SECP in their comments advised the Division to follow section 74 of the Companies Act, 2017and fill in form-3 in terms of regulation 41 of the Companies regulation, 2024. They had also advised that the transfer of shares must align with the agreements executed between WAPDA and DISCOs and suggested that the shares should be in book entry form in terms of section 72 of the Companies Act, 2017.
The Power Division submitted following proposals for consideration and approval of the ECC: (i) allow WAPDA to transfer shares of IESCO, LESCO and MEPCO in the name of the President of Pakistan, so that WAPDA and these DISCOs may update and clear their books; and (ii) allow DISCOs namely GEPCO, FESCO, QESCO, PESCO, TESCO, HESCO and SEPCO to issue shares to WAPDA after completion of the process under Supplementary Business Transfer Agreement (SBTA), enabling WAPDA and these DISCOS to update and clear their books.
During the ensuing discussion, the forum emphasized that all issues related to privatization should be addressed beforehand to avoid any complications later on. It was opined that the matters concerning audit and assets transfer should be settled on priority basis. The forum stressed the need of carrying out reconciliation of shares prior to their transfer to the President. The forum was apprised that opinion of Law and Justice Division must be obtained before granting retrospective approval of shares transfer to ensure that no financial implication was associated with it. The forum also inquired about the updated status of the balance sheet and fixed assets of the companies. The Power Division, in response, confirmed that all the formalities had been completed and reconciliation had also been done.
The Power Division further confirmed that the respective Boards had also been updated of those developments and that the proposal did not entail any retrospective approval of the shares already transferred and neither was there any financial implication of already transferred shares. It was further informed that WAPDA is also fully on board on this proposal.
After detailed discussion, the ECC approved “transfer of shares of DISCOs in the name the President of Pakistan” and also allowed DISCOs namely GEPCO, FESCO, QESCO, PESCO, TESCO, HESCO and SEPCO to issue shares to WAPDA after completion of the process under Supplementary Business Transfer Agreement (SBTA), enabling WAPDA to transfer these shares in the name of the President of Pakistan so that WAPDA and these DISCOS may update and clear their books.
The Federal Cabinet, in its meeting held on February 18, 2025 also ratified the decision of the ECC, so that all issues related to shares transfer are settled expeditiously. Ends
