Faisalabad Electric Supply Company Limited

Faisalabad Electric Supply Company Limited (FESCO) is one of the nine-electricity distribution companies (DISCOs) established as a result of the unbundling of the vertically integrated power wing of Pakistan Water and Power Development Authority (WAPDA). It was organized to take over the properties, assets, obligations and liabilities of former Faisalabad Area Electricity Board (AEB) of WAPDA. The company was incorporated in March 1998 as a public limited company under Pakistan Companies Ordinance 1984.

FESCO distributes and supplies electricity to about 1.8 million customers within its service area with a population of over 15.5 million, under a Distribution License granted by National Electric Power Regulatory Authority (NEPRA) pursuant to the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (NEPRA Act).
 

The Government of Pakistan (GoP) intends to privatise FESCO through sale of 56% of its shareholding in the company to a strategic investor or a consortium of strategic and financial investors of which the investor would be required to sell 5% shares to the employees by instituting Employee Stock Ownership Program (ESOP) within one year of taking over of FESCO. The GoP intends to hold 44% of the equity beyond privatsiation.
 

• Operational Performance: FESCO is one of the best electricity distribution companies in Pakistan in terms of operational performance, as it has low degree of distribution losses and a high rate of bill collection.
• Customer Base: FESCO’s main service area is Faisalabad, known as Manhestor of Pakistan for its extensive textile industries. The transaction thus offers the opportunity for interested investors to acquire a large customer base with a substantial portion of energy sold to industrial customers who consume 37% of the energy sold and contribute towards 48% of revenue.

FESCO 2002

• Tariff: NEPRA has approved a multi-year tariff for FESCO which includes a pass through Power Purchase Price and Distribution Margin.
• Regulatory Framework: FESCO would have the oversight of NEPRA, Pakistan Power Sector’s independent regulator, established in 1997 to protect the interests of both the investors and customers.
   

International Finance Corporation (IFC) is the Financial Advisor for the transaction supported by Orr Dignam & Co., ESBI, NERA and A.F. Ferguson & Co. as its legal, technical, economic and financial consultants. The marketing of the transaction began in January 2003 with the invitation of Expression of Interests (EOIs) and Statement of Qualifications (SOQs) from parties interested in the privatisation of FESCO. Interested parties submitting the SOQs by the closing date have been evaluated and pre-qualified for bidding. The prospective bidders are engaged in their due diligence.