Beijing: China’s expanding economic footprint in Pakistan has encountered another hurdle after a Chinese state-linked company failed to qualify for the privatisation process of Faisalabad Electric Supply Company (FESCO), a major power distribution utility in the country, according to News18.
The development comes against the backdrop of Beijing’s central role in Pakistan’s economic relationship with China. Under the Belt and Road Initiative (BRI), the China-Pakistan Economic Corridor (CPEC) has remained a key pillar of bilateral economic cooperation. Over the past decade, Chinese companies have made substantial investments in Pakistan’s electricity, transportation and infrastructure sectors.
The setback involving FESCO also underscores the challenges surrounding investment in Pakistan’s financially strained power distribution sector.
Jiang Xi Electric Power Construction, a Chinese state-linked company, had expressed interest in purchasing between 51 per cent and 100 per cent of FESCO, along with management control. According to News18, the company was the only Chinese bidder among 12 investors that initially showed interest in the utility.
However, the Chinese company was later excluded from the list of prequalified bidders. Pakistani media reports cited by News18 said the firm submitted its bid-related documents in Mandarin instead of following the documentation requirements laid down for the process.
The Privatisation Commission subsequently cleared 10 of the 12 interested parties to proceed to the next stage, leaving the Chinese participant out of the process.
The development is noteworthy as Pakistan seeks to bring foreign investment into its financially troubled electricity distribution companies. Islamabad has selected FESCO, Gujranwala Electric Power Company (GEPCO) and Islamabad Electric Supply Company (IESCO) as the first group of distribution companies, or DISCOs, targeted for privatisation. Together, the three utilities provide electricity services to more than 14 million consumers.
Pakistan has been seeking interest from investors in China, Türkiye and other countries as part of broader efforts to restructure the power sector and ease the financial pressure associated with state-owned utilities.
The proposed privatisation comes at a critical juncture for Pakistan’s electricity industry. The sector has been weighed down by continuing financial losses, outstanding payments and mounting circular debt. These longstanding problems have disrupted payments throughout the electricity supply chain, weakened the finances of power utilities and created additional obstacles for new investment.
Against this backdrop, the failure of a Chinese participant to advance in the FESCO privatisation process represents a setback at a time when Islamabad is looking to international investors—including Chinese companies—for capital and expertise to overhaul its power distribution system, News18 reported.