Multan Electric Power Company (MEPCO/The Company) is a public unlisted company, incorporated in Pakistan on May 14, 1998. Its registered office is situated at Khanewal road, Multan

The Company was established and took over the assets, liabilities, rights and obligations of the Multan Area Electricity Board (MAEB), which is owned by Pakistan Water and Development Authority (WAPDA). The transfer also included other specified assets and liabilities as mutually agreed. Prior to the amendment of the NEPRA Act in April 2018, the electricity distribution function encompassed both the physical infrastructure (commonly referred to as the wire business) and the sale of electricity to end-consumers. However, the NEPRA (Amendment) Act, 2018, introduced a structural change by separating the sale of electricity from the distribution function. MEPCO currently distributes and supplies electricity to over 8mln customers within its licensed territory.

MEPCO was initially deemed to hold a license for the supply of electric power for a period of five years, which expired on April 24, 2022. Subsequently, NEPRA provisionally renewed the license for six months. Thereafter, upon MEPCO’s application for renewal/extension, NEPRA granted a fresh distribution license valid for 20 years, up to May 2043. In addition, NEPRA has also issued an Electric Power Supply License to MEPCO, valid until April 2043. MEPCO operates through nine administrative zones: Multan, Khanewal, Sahiwal, Bahawalpur, Bahawalnagar, Muzaffargarh, Dera Ghazi Khan, Rahim Yar Khan, and Vehari. Its primary mission is to ensure the reliable and safe supply of electricity to all consumers within its jurisdiction.

MEPCO is 100% owned by Government of Pakistan through Ministry of Energy –Power division. While the nominal one shares each are held in the names of Chairman of the BoD and CEO of the Company

The Company, backed by stable government ownership, is the largest power distribution company in Pakistan with a consumer base of approximately 8 million as of FY24. Its ownership structure provides strategic importance and continued policy support, reinforcing its role in the country’s power sector.

MEPCO, the largest electricity distribution company in Pakistan with a consumer base of around 8mln as of FY24, supplies power to Southern Punjab. Entirely owned by the GoP, it benefits from stable ownership, institutional experience, and financial support. The GoP is actively working toward the development of a competitive electricity market through the implementation of the CTBCM (Competitive Trading Bilateral Contract Market) model. As this market structure evolves, MEPCO is expected to operate with greater independence and efficiency in a liberalized environment, gradually reducing its reliance on government support.

MEPCO remains under sovereign ownership, and given its strategic importance as the country’s largest electricity distributor, the likelihood of continued government support remains strong. This support, particularly in the form of financial assistance, has historically included capital injections when required. In addition, MEPCO receives subsidies from the Government to ensure affordable electricity for low-income consumers. These subsidies comprise components such as the Tariff Differential Subsidy (TDS), AQTA Subsidy, Zero-Rated Industrial Rebate, and the Kissan Package Subsidy

The Board of Directors (BoD) of MEPCO comprises 8 members, including 5 independent directors, 1 non-executive director, and 2 executive directors. The composition also includes 2 female board members, along with nominees from the Ministry of Energy (Power Division). The Board consists of seasoned professionals with diverse expertise, ensuring effective governance and strategic oversight.

The Ministry of Energy appointed MEPCO’s Board members on July 24, 2024. This includes the designation of Mr. Amer Zia as Chairman/Independent Director for a three-year term, following the resignation of the former Chairman, Sardar Muhammad Jamal Khan Leghari. Other independent directors appointed by the Ministry are Mr. Imran Zaffar, Ms. Zainab Janjua, Mr. Khawaja Jalaluddin Roomi, and Mr. Tahir Basharat Cheema. These appointments are expected to strengthen MEPCO’s governance framework and enhance its operational efficiency.

During FY24, MEPCO’s Board of Directors (BoD) demonstrated strong governance and oversight by convening 13 meetings to deliberate on the Company’s strategic decisions. Attendance remained robust, with a majority of directors participating in over 80% of the meetings, reflecting their active engagement. To ensure focused oversight across critical areas, the Board has established six specialized committees: (i) Procurement & Disposal Committee, (ii) Audit & Finance Committee, (iii) Legal Committee, (iv) Customer Service, HSE & Quality Assurance Committee, (v) HR & Nomination Committee, and (vi) Policy, Strategy, Market Reforms & Risk Management Committee

M/s Yousuf Adil & Company Chartered Accountants, Lahore, are the external auditors of the company. The auditors have given Un-qualified opinion on the company’s financial statements for the year ended June 2024.

MEPCO has a well-defined and properly documented organizational structure designed to support effective governance, operational efficiency, and accountability. At the top of the hierarchy is the Chief Executive Officer (CEO), who is responsible for the overall management and strategic direction of the Company. The CEO, with consolidated input from all functional departments, reports directly to the BoD. Supporting the CEO are the heads of key departments, including the Chief Financial Officer (CFO) and General Managers of Operations, Customer Services, Technical Services, Planning & Engineering, HR & Admin, IT, and Procurement & Store. These departments are led by experienced professionals and are further supported by competent and skilled team members who bring specialized expertise to their respective functions. Additionally, the Company Secretary and the Chief Internal Auditor maintain independent reporting lines directly to the Board of Directors, ensuring transparency and compliance with corporate governance requirements.

Engr. Jam Gul Muhammad is the current Chief Executive Officer (CEO) of MEPCO, appointed for a three-year term. He brings with him decades of professional experience. Supporting the leadership team, Mr. Ansar Mehmood serves as the Chief Financial Officer (CFO) of the Company and is a Fellow Member of the Institute of Cost and Management Accountants, while Engr. Khalid Mehmood holds the position of General Manager (Operations). In addition, MEPCO’s management team comprises other seasoned professionals heading key functions, collectively ensuring effective execution of the Company’s strategic and operational objectives.

MEPCO management team demonstrates effectiveness in its role, supported by relevant experience, professional qualifications, and a long-standing association with the Company. The team is responsible for overseeing key functional areas, allowing the Company to maintain operational continuity, comply with regulatory requirements, and implement strategic initiatives in an organized and structured manner. The management’s role is further reinforced by the BoD through its specialized committees, which provide oversight and strategic guidance on critical matters.

MEPCO has initiated the process to achieve Digital Transformation by implementing ERP with an aim to achieve Business Automation of the Company’s processes. The ERP consists of Business Intelligence Analytics along with modules of Project Delivery and Asset Management supported by the modules of Finance, Supply Chain and Human Resource.

MEPCO maintains an adequate control environment with defined policies and procedures. The Company’s internal audit function performs regular reviews on the financial, operational and compliance controls. In addition to routine audits, dedicated teams have been established to target high-loss areas, aiming to reduce distribution losses and improve efficiency. A comprehensive audit program distinct from standard financial audits has also been implemented. This program covers a broad range of operational areas, including human resources, procurement, and quality assurance, with the objective of identifying potential risks, preventing corruption, eliminating ambiguities, and ensuring transparency. These proactive measures are designed to strengthen internal controls and enhance the overall governance of the Company.

Pakistan’s power sector operates under a centralized model, with the Central Power Purchasing Agency Guarantee (CPPA-G) acting as the sole buyer of electricity for the country’s ten Distribution Companies (DISCOs). These DISCOs are responsible for distributing electricity to end consumers, managing infrastructure, and overseeing billing and revenue collection. They provide demand forecasts to CPPA-G, which procures electricity from both government-owned generation companies (GENCOs) and Independent Power Producers (IPPs).

The National Electric Power Regulatory Authority (NEPRA) governs the sector’s regulatory framework, including procurement mechanisms and tariff setting, based on the cost of generation, transmission, and distribution. While NEPRA determines cost-reflective tariffs, the government enforces a uniform tariff across all DISCOs to maintain affordability and equity, bridging the cost gap through subsidies.

Despite this structure, the sector continues to grapple with systemic inefficiencies, most notably the accumulation of circular debt, high distribution losses, and low recovery ratios in certain regions. To address these challenges, the government and stakeholders have launched multiple reform initiatives, including the privatization of DISCOs, strengthening operational management, improving governance, deploying Advanced Metering Infrastructure (AMI), and installing Aerial Bundled Cables (ABC) to curb electricity theft and reduce technical losses.

An emerging dynamic in the distribution segment is the rapid adoption of distributed solar solutions. With rising electricity tariffs and frequent supply interruptions, consumers—both residential and industrial—are increasingly shifting toward rooftop solar and net metering. This growing solarization trend is gradually reshaping the traditional demand profile of DISCOs, presenting both challenges (in terms of revenue sustainability and grid management) and opportunities (reduced burden on the grid and lower transmission losses). Going forward, the integration of renewable energy at the distribution level, alongside digitalization and automation of networks, will be critical for improving efficiency, reliability, and financial viability of the power distribution system in Pakistan.

Going forward, the implementation of the Competitive Trading Bilateral Contract Market (CTBCM) is expected to fundamentally change the operating landscape for DISCOs. Under this model, DISCOs will no longer remain passive recipients of centrally procured electricity but will transition into active market participants, entering into bilateral contracts with generators and large consumers. Combined with the solarization trend, CTBCM will increase competitive pressures, requiring DISCOs to operate with greater efficiency, improve service delivery, and diversify their revenue streams to remain financially sustainable in a liberalized power market

Currently, there are eleven DISCOs including KE, operating in Pakistan under the administrative purview of the Ministry of Energy (Power Division). MEPCO is the largest Power distribution company in terms of Consumer base of around. 8mln consumers as of FY24. It has license to operate in 13 administrative districts of Southern Punjab. However, the distribution wing of the power sector has grappled with persistent challenges, including high T&D losses and inadequate bill recoveries by the DISCOs.

The National Electric Power Regulatory Authority (NEPRA) oversees the sector’s regulatory framework, including procurement mechanisms and tariff setting, based on the costs of generation, transmission, and distribution. While NEPRA determines cost-reflective tariffs, the government enforces a uniform tariff across all DISCOs to ensure affordability and equity, bridging the cost gap through subsidies. In FY 2024, revenue grew by 32.5% compared to FY 2023, reaching PKR 597,609 million. 9MFY25, revenue stood to PKR 361,552, while units sold declined by 1.02%, falling to 16,904 KWh. The decline in units sold is also partly attributed to the increasing shift of consumers toward rooftop solar installations, which has begun to impact grid-based consumption. As more consumers adopt net metering and distributed generation, especially in urban and industrial areas, the trend is likely to continue, leading to further moderation in energy demand from the distribution grid.

Despite revenue growth, MEPCO’s gross profit declined to PKR 28bln in 9MFY25 (FY24: PKR 71bln), translating into a normalized gross margin of 7.9% (FY24: 11.9%). The decline is primarily due to the lag in monthly fuel cost adjustments (FCA) and higher average power purchase costs from CPPA. Consequently, the Company posted a net loss of PKR 6.1bln in 9MFY25 (FY24: net profit of PKR 31bln), with a negative net margin of 1.7% (FY24: 5.3%). The profitability outlook is expected to stabilize once timely tariff adjustments are ensured; however, any delay may continue to pressure margins. Notably, in the case of DISCOs, costs are incurred in real time while revenues are recognized with a lag, reflecting the regulated tariff framework. As a result, financial discipline remains weak, leading to periods of elevated profitability followed by substantial losses in other periods.

MEPCO is a mid-tier electricity distribution company in Pakistan, primarily catering to a large rural customer base. While it serves one of the highest numbers of consumers among DISCOs, the per-consumer utilization remains relatively low compared to urban-centric companies. The majority of its customers belong to the domestic segment, with smaller contributions from industrial and commercial users. Under the Competitive Trading and Bilateral Contracting Market (CTBCM) framework and the National Electricity Policy, MEPCO has established a Market Implementation and Regulatory Affairs Department (MIRAD). This unit acts as a liaison with the evolving power market and regulatory bodies, undertaking responsibilities such as power procurement planning, contract management, compliance, and coordination with NEPRA and other sector stakeholders. Through MIRAD[AW1] , MEPCO is aligning itself with sector reforms, ensuring readiness for competitive market operations despite the challenges of its largely rural and low-utilization consumer profile.

The business model of electricity distribution companies typically does not involve significant inventory, except for minimal store items used for maintenance and repairs. Their working capital cycle primarily consists of receivables from consumers against electricity sales, subsidy receivables from the government, and payables to CPPA-G for power purchases. The Recovery ratio in 9MFY remains over 97% representing a better cash collection.

MEPCO has sustained its operations through internal cash generation, with no working capital lines currently in place and, consequently, no utilization of short-term borrowings. As of 9MFY25, receivables stood at PKR 35,409mln, while payables were recorded at PKR 109,082mln. This imbalance has resulted in negative working capital days of 59 (FY24: 57 days), reflecting a stretched liquidity position.

In 9MFY25, the Company experienced a decline in its debt service coverage ratio (DSCR), which fell to (0.9x) (FY24: 3.4x). This deterioration in the DSCR can be attributed to a decrease in funds flow from operations (FCFO), which amounted to PKR (6.7bln) (FY24: PKR 34bln) in 9MFY25. The negative FCFO is linked to lower profitability due to net loss booked during the year on account of delays in customer tariff adjustments during the fiscal year which were booked in the subsequent period.

As of 9MFY25, the Company reported a negative leverage of -21% (FY24: -17.9%), primarily attributable to negative equity of PKR 87 billion. The adverse equity position stems from the prolonged delay in tariff approval by NEPRA, which has significantly affected the Company’s financial standing. MEPCO’s total debt stood at PKR 15bln, comprising only long-term borrowings and their current maturities, with no reliance on short-term financing.