Ageing power plants auction gets tepid response

ISLAMABAD: Pakistan’s second-phase auction of aging state-owned thermal power plants faltered Monday, with just one bidder surfacing for the 880MW Jamshoro plant and no offers for two larger GENCO-III stations.

This is highlighting both the opportunities and challenges in the government’s broader push for energy sector reforms. The 880-megawatt Jamshoro Thermal Power Station (GENCO-I) was the only plant to receive a technical bid, submitted by Siddeeq & Sons. The government had set a reserve price of Rs9.97 billion for this asset.

In contrast, no bids were received for two major facilities under GENCO-III—Muzaffargarh Thermal Power Station (1,350 MW) and Faisalabad Steam Power Station (132 MW). Together, these three plants had a reserve price of Rs26.62 billion, with generation capacity of 2,362 MW. Officials confirmed the lack of interest from investors despite marketing efforts and expectations of broader participation.

An official said this lone technical bid for Jamshoro plant will be analysed and assessed further, and then the financial bid will be opened later in a few days. The muted response underscores the challenges the government faces in disposal of legacy power assets as part of its broader energy sector reforms. These are mostly non-performing or aging generation assets built between the 1970s and 1990s.

Meanwhile, the bidding process for other plants under GENCO-II, including Guddu Thermal Power Plant and TPS Quetta, has been postponed. These assets will now be offered on May 30 in a separate round. The delay comes amid a need for more investor outreach and clarity on the terms of sale.

GENCO CEO Sabiha Uz Zaman Farooqi acknowledged the limited outcome and said that the auctioning of outdated power assets was always expected to proceed in phases due to the age and condition of the plants. The process is technically complex, and investor appetite varies depending on plant location, efficiency, and future viability, he said. However, he said that he was optimistic that later this month process will attract more bidders.

A total of 29 power plants were offered for auction, with a combined generation capacity of 4,074 megawatts and a reserve price set at Rs40.661 billion. The plants include various blocks and units from Jamshoro, Guddu, Muzaffargarh, Quetta, and Faisalabad.

Notably, in the first phase of the auction held a few months, the government successfully sold seven thermal plants for Rs9.05 billion, exceeding the reserve price of Rs8.07 billion. These included units in Kotri, Larkra, Sukkur, and four in Multan and Faisalabad. NESPAK, a state-owned engineering consultancy firm, is assisting in the technical evaluation and bidding process.