Faisalabad Electric Supply Company Limited (“FESCO” or “the Company”) is a public limited company, incorporated on March 21, 1998 under the Companies Ordinance, 1984, (now Companies Act, 2017). Its registered office is located on West Canal Road, Abdullahpur, Faisalabad.

FESCO was carved out of the erstwhile Faisalabad Area Electricity Board (FAEB), a constituent of the Pakistan Water and Power Development Authority (WAPDA), taking over its assets, liabilities, rights and obligations at the time of the power sector's unbundling. The NEPRA (Amendment) Act, 2018 subsequently separated the supply of electricity from the distribution (wires) business; since then, FESCO's licensed mandate has been confined to operating and maintaining the distribution network and supplying electricity to consumers within its service territory.

FESCO operates under a Distribution and Electric Supply License issued by NEPRA pursuant to the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997. Its service territory covers eight districts of Central Punjab - Faisalabad, Sargodha, Mianwali, Khushab, Jhang, Bhakkar, Toba Tek Singh and Chiniot - served through a network of 132-kV and 66-kV grid stations. As of December 2025, the Company served approx. 5.8mln connections across an estimated population base of over 26mln, with the consumer mix predominantly domestic (89%), followed by commercial (8%), agricultural (1%), industrial (1%) and other general services (1%).

FESCO is wholly owned by the Government of Pakistan (GoP), with its shareholding registered in the name of the President of Pakistan and exercised through the Ministry of Energy – Power Division.

FESCO has remained under GoP ownership since its inception, although its privatization has featured on successive government agendas for over three decades — from the Council of Common Interests' original 1993 approval of a phased GENCO/DISCO privatization, through repeated reaffirmations by the Cabinet Committee on Privatization (CCOP) in 2009 and 2017, and a brief pivot toward an IPO-led divestment in 2016 that was subsequently shelved in favor of a strategic sale. This process has materially advanced over the past year: the CCOP has approved the sale of up to 100% of FESCO's equity together with management control, and the Privatization Commission formally invited Expressions of Interest on May 19, 2026, with FESCO's bid deadline set for July 7, 2026, ahead of GEPCO (August 6, 2026) and IESCO (September 7, 2026).The government has conducted international investor roadshows, including in Saudi Arabia, China and Türkiye. Pending the conclusion of this process, FESCO continues to operate under full GoP ownership and oversight.

Operating as a distribution utility since 1998, FESCO has drawn on the State's institutional and financial backing to sustain service delivery across a large and geographically dispersed consumer base, while progressively building internal capacity in commercial management, network operations and regulatory affairs ahead of an anticipated change in ownership.

As a wholly state-owned utility occupying a strategically important position within Pakistan's distribution network, FESCO has historically benefited from GoP financial support, including periodic equity injections, and continues to administer government-funded consumer subsidies — including the Tariff Differential Subsidy (TDS), the AQTA Subsidy, the Zero-Rated Industrial Rebate, and the Kissan Package Subsidy — that enable electricity to be supplied to qualifying consumers below cost-reflective rates. The continuity of the existing support framework will unfold upon the materialization of the privatization process, including the final ownership, governance, and financial support structure.

The Board of Directors was reconstituted by the Ministry of Energy (Power Division) in July 2024 for a three-year term, comprising nine members — five independent directors, three non-executive directors and one executive director — including two female directors. The current Board composition reflects the existing government ownership structure and may be reconstituted following the completion of the privatization process, in accordance with the post-transaction ownership and governance framework.

The Board brings together professionals from diverse backgrounds. Mr. Omer Farooq Khan, a businessman, chairs the Board as an independent director and has been associated with FESCO since September 2024. Mr. Muhammad Aamir, holding a B.Sc. in Electrical Engineering and an MBA in Finance, serves as Executive Director alongside his role as CEO. The independent directors include Ms. Zoe Khurshid Khan (LLB Hons, LLM), Engr. Pervaiz Iqbal (B.Sc. Electrical Engineering, MBA), Mr. Adil Bashir (BBA, MBA) and Mr. Amir Zia (Professional Engineer), contributing legal, engineering and commercial expertise respectively. Mr. Hassan Raza Saeed and Mr. Umer Azmatullah serve as non-executive directors representing government interests, while Ms. Lubna Usman (M.Sc. Psychology) rounds out the Board with a behavioral and administrative perspective.

Five Board committees support FESCO's governance — covering audit and financial risk; HR, legal and HSE matters; technical and procurement initiatives; policy, strategy and marketing; and customer services and IT — each governed by documented Terms of Reference. The Audit and Technical Committees comprise five members each, with the remaining committees at six members apiece. The Audit, Customer Services and Risk Management Committees are mandated to meet at least quarterly, and overall Board attendance at committee meetings during the year remained satisfactory.

Riaz Ahmad & Company, Chartered Accountants, serve as FESCO's external auditors and issued an unqualified opinion on the Company's FY25 annual financial statements, albeit with an Emphasis of Matter paragraph on unresolved tax contingencies that did not modify the opinion. The same firm subsequently reviewed FESCO's condensed interim financial statements for the half year ended December 31, 2025, issuing its review conclusion in March 2026 with a similar Emphasis of Matter relating to ongoing income tax and sales tax matters pending before the Lahore High Court and, in several cases, referred to the Alternate Dispute Resolution Committee. FESCO's financial statements are prepared under the Companies Act, 2017 and applicable accounting standards, with management additionally preparing quarterly accounts for internal oversight.

FESCO maintains a documented organizational structure intended to support effective governance and accountability. The Chief Executive Officer (CEO) holds overall management responsibility and reports to the Board with consolidated input from functional heads, including the Chief Financial Officer (CFO) and General Managers for Operations, Customer Services, Technical Services, Planning & Engineering, HR & Administration, IT, and Procurement & Stores. The Company Secretary and Chief Internal Auditor report independently to the Board.

Mr. Muhammad Aamir (B.Sc. Electrical Engineering, MBA Finance) serves as CEO, bringing a long association with the Company since 1995. Mr. Nazir Ahmed, CFO since 1992, is a Fellow Public Finance Accountant and Fellow Chartered Management Accountant. Mr. Muhammad Fahim Habib serves as Chief Internal Auditor. The broader leadership team includes Mr. Umer Hayat (GM Operations), Mr. Muhammad Rafique (GM Technical), Ms. Sadaf Naz (GM Commercial & Customer Services) and Mr. Muzaffar Abbas (Company Secretary), supported by Director-General level appointments across HR, Administration, IT and Law. A dedicated Market Implementation and Regulatory Affairs Department (MIRAD), headed by Mr. Abid Rashid, oversees FESCO's preparation for the Competitive Trading Bilateral Contract Market (CTBCM) and manages tariff and regulatory matters with NEPRA. All senior management members have long-standing tenures with the Company and are supported by experienced teams.

FESCO's management team brings extensive experience, professional qualifications, and long-standing tenure with the Company, enabling effective oversight of key functional areas. This ensures operational continuity, regulatory compliance, and structured implementation of strategic initiatives. The Board of Directors further strengthens management's role through its specialized committees, which provide oversight and strategic guidance on critical matters. Together, this governance framework promotes informed decision-making and ensures alignment with FESCO's overall objectives.

FESCO operates an Enterprise Resource Planning (ERP) system structured around financial reporting, human resources, transaction processing and management-level planning modules, integrated with the Company's consumer billing platform to support real-time data exchange and accurate billing.

The Company's internal audit function conducts regular reviews of financial, operational and compliance controls, complemented by dedicated teams targeting high-loss areas to reduce distribution losses, and a broader operational audit program covering procurement, HR and quality assurance.

Pakistan's power distribution segment continues to operate largely under a centralized single-buyer model, with the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G) procuring electricity from GENCOs and Independent Power Producers (IPPs) on behalf of eleven DISCOs, including K-Electric, and on-selling it at a uniform, NEPRA-determined tariff, with the gap between cost-reflective and notified tariffs bridged through government subsidy. NEPRA's State of the Industry Report 2025, released in January 2026, found that no DISCO met its regulator-approved T&D loss target during FY25: average sector-wide T&D losses stood at approximately 17.55%, against an allowed benchmark of 11.43%, an excess estimated to have cost the exchequer around Rs 265bln, while a sector-wide bill-recovery shortfall added a further Rs 132bln — together contributing close to Rs 397bln to circular debt during the year. The regulator identified PESCO, HESCO, SEPCO and QESCO as the weakest performers across most operational and financial indicators, while FESCO, GEPCO, IESCO, LESCO and MEPCO were among the few DISCOs to achieve better collection rates. The power sector is currently undergoing its most extensive transformation: the Competitive Trading Bilateral Contract Market (CTBCM), marking a shift from the single-buyer model, with the first competitive auction for 800 MW scheduled for September 2026. In parallel, the government is advancing the privatization of three top-performing DISCOs - FESCO, GEPCO, and IESCO and offering base returns with performance-based incentives to attract investors, while conducting international roadshows in Saudi Arabia, China, Türkiye, and the Middle East. FESCO's EOI submission deadline is July 7, 2026, followed by GEPCO on August 6 and IESCO on September 7, with bidding expected to proceed sequentially through December 2026.

FESCO is one of the ten state-owned DISCOs operating under the Ministry of Energy (Power Division) and is consistently ranked among the sector's top three performers, alongside GEPCO and IESCO. For FY25, FESCO reported T&D losses of approximately 8.89%, only marginally above its NEPRA-allowed benchmark of 8.38% and among the smallest excess-loss positions of any DISCO, against a sector average of roughly double the allowed limit. Its bill recovery ratio of around 100.4% placed it among the small group of DISCOs meeting or exceeding NEPRA's full-recovery target, in contrast to chronically weak recoverers such as QESCO, SEPCO and HESCO. Part of this relative strength reflects FESCO's service territory, given its textile and industrial base, and a comparatively urbanized catchment with a stronger consumer payment culture than DISCOs operating in more dispersed, rural or security-affected geographies. This favorable operating environment sits alongside FESCO's own commercial and loss-reduction practices.

During the six months ended 31 December 2025 (1HFY26), FESCO recorded net revenue of PKR 240,938mln while total revenues for FY25 stood at PKR 470,120mln, up 2.0% YoY from PKR 461,024mln in FY24. Revenue growth has historically been driven by tariff adjustments and recognition of Tariff Differential Subsidies (TDS), alongside a relatively stable volumetric sales base. Units sold remained largely consistent at 14,428,279 GWh in FY25, while TDS recognized amounted to PKR 79,490mln. During 1HFY26, TDS amounted to PKR 42,120mln (PKR 38,893mln in the comparable period). The revenue trajectory reflects the combined effect of periodic tariff revisions and subsidy realizations, which continue to shape the Company's topline performance.

During 1HFY26, revenue from electricity sales reached PKR 240,938 mln with total cost of electricity of PKR 202,539mln, resulting in a gross profit of PKR 38,398mln and a gross margin of 15.94%. This marks an improvement from 15.0% in FY25 and a significant recovery from 8.4% in FY24, supported by moderating power purchase costs and a more balanced pricing structure. Consequently, net profit margin for 1HFY26 stood at 6.87%, while for FY25, net profit margin improved to 2.0% from 0.2% in FY24. While the cost of electricity is recorded on an actual basis, revenue recognition is subject to periodic timing differences, as tariff revisions and subsidy determinations by NEPRA and the government are often finalized with reference to prior periods. This timing dynamic means that reported margins may not always align with the current period's operational performance. Furthermore, the current return structure remains largely asset-based, with revenue and margins shaped by regulated tariffs under the cost-plus framework and the quantum of TDS recognized, rather than being directly driven by operational efficiency improvements. As a result, period-on-period margin trends are influenced not only by cost dynamics but also by regulatory timing and subsidy realization cycles.

FESCO remains among the better-positioned DISCOs in operational terms, supported by contained distribution losses, strong bill recovery and the strategic importance of its industrial consumer base. Its near-term sustainability will hinge on continuing to hold T&D losses close to NEPRA-allowed levels and recovery ratios near current levels, while its medium-term trajectory remains contingent on the outcome of the privatization process and the pace of the broader transition toward the CTBCM framework, for which the Company's MIRAD unit has been positioned to manage procurement planning, contract administration and regulatory coordination.

FESCO's working capital cycle is shaped primarily by receivables from electricity sales, subsidy receivables from the government, and payables to CPPA-G for power purchases, with minimal inventory requirements beyond maintenance stores. Trade debts declined to Rs 51,681mln as of December 2025, from Rs 69,911mln at FY25 year-end, reflecting continued collection discipline. Trade and other payables fell more sharply, to Rs 57,597mln from Rs 117,892mln at FY25 year-end, a reduction of just over 51%, indicating a marked improvement in the Company's payment position toward CPPA-G during the period. FESCO continues to manage its working capital without recourse to short-term borrowings.

In 1HFY26, the Company continued to demonstrate a strong debt coverage profile, supported by healthy Free Cash Flows from Operations (FCFO). FCFO reached PKR 33,345mln during the six-month period, compared to PKR 35,255mln for the full year FY25. The strong FCFO in 1HFY26 was driven by improved profitability and recognition of Tariff Differential Claims (TDC) related to customer tariff adjustments. EBITDA for 1HFY26 stood at PKR 50,030mln, with the EBITDA-to-Finance Cost coverage ratio improving to 75.0x and FCFO-to-Finance Cost ratio reaching 50.0x, reflecting the Company's capacity to service its debt obligations. The Company also maintains strong liquidity through short-term investments and cash reserves, further enhancing its financial flexibility and ability to meet debt obligations.

FESCO maintains a conservative capitalization profile, characterized by a strong equity base and minimal reliance on external debt. As of December 2025, shareholders' equity improved to PKR 95,436mln, up from PKR 62,970mln at FY25 year-end, primarily reflecting government equity injections and retained earnings. Consequently, the gearing ratio improved to 5.5% from 8.1% during the same period, underscoring the Company's low leverage position. The outstanding debt is limited to a small, concessionary ADB loan relent by the government, totaling PKR 5,541mln, with no short-term borrowings on the balance sheet. Given that this debt is government-backed and the overall capital structure currently benefits from state support, the eventual privatization process may lead to a reconfiguration of the Company's capitalization and financial framework, subject to the final transaction terms and ownership structure.