Privatization of DISCOs is a Historic Milestone, but EU Carbon Laws Pose Existential Threat to Karachi Exports: Mian Zahid Hussain

KARACHI – January 5, 2026: Mian Zahid Hussain, President Pakistan Businessmen and Intellectuals Forum & All Karachi Industrial Alliance, Chairman National Business Group Pakistan, Chairman Policy Advisory Board FPCCI, and Former Provincial Minister Information Technology, said today that while the government’s accelerated privatization drive is a commendable step toward economic stabilization, the country’s industrial base faces an immediate and severe challenge from the European Union’s newly implemented carbon regulations. Speaking to the business community, he welcomed the Privatization Commission’s decision to issue Expressions of Interest for the profitable power distribution companies IESCO, FESCO, and GEPCO this month, noting that this move will finally stem the hemorrhaging of national resources.
Mian Zahid Hussain said that the reported interest from foreign consortiums, particularly Turkish investors advised by Raiffeisen Investment, validates the improved investment climate in Pakistan. He added that expanding the privatization active list to include Saindak Metals, Pakistan Mineral Development Corporation, and the National Insurance Company Limited is a strategic decision that will unlock the true potential of these underperforming assets. However, he cautioned that these gains could be neutralized if the country’s export sector fails to adapt to the "definitive regime" of the EU’s Carbon Border Adjustment Mechanism (CBAM), which officially came into force on January 1, 2026.
The veteran business leader warned that while the privatization of DISCOs will improve energy management in the long run, Karachi’s exporters are facing an immediate crisis today.
European buyers have effectively begun demanding "Carbon Passports" from Pakistani suppliers to future-proof their supply chains against the new levies. He highlighted that Karachi’s industrial hubs, including Korangi and SITE, are particularly vulnerable because many units rely on captive power generation using gas or furnace oil. Under the new EU rules, these energy sources carry a high "carbon intensity" rating, which could make Pakistani goods prohibitively expensive compared to competitors in Vietnam or Bangladesh who utilize greener grid electricity.
Mian Zahid Hussain proposed an urgent solution, calling on the Ministry of Energy and K- Electric to immediately designate specific industrial feeders as "Green Energy Zones." He explained that by certifying that electricity supplied to these zones comes from renewable sources like hydro, wind, or solar, the government can allow exporters to claim near-zero emissions for their products without needing to install individual solar plants. He stressed that without verified emission data, EU authorities will apply punitive "default values" to Pakistani exports, which would be disastrous for the textile and manufacturing sectors.
He concluded that while shedding state-owned losses through privatization is essential for fiscal health, protecting the export lifeline requires immediate regulatory innovation. He urged the government to prioritize the "Green Grid" certification to ensure that Pakistan’s hard-won export orders are not lost to carbon taxes in the European market.