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Centre rejects Sindh objection to 2 RLNG plants sale

By Our Correspondent
December 28, 2018

ISLAMABAD: In a complete contrast to the tradition of taking decision at the constitutional forum of the Council of Common Interest (CCI) unanimously, the PTI led government has set aside the objections raised by Sindh over sale of two RLNG power plants in a bid to raise around $2 billion within the current financial year.

Although, there is no constitutional bar for taking decisions at the CCI with majority, but it is tradition that most of the decision are taken unanimously by evolving consensus among the Centre and federating units especially in the aftermath of 18th Constitutional amendments.

It will be the first time in recent years after enactment of 18th amendments that the observations made by Sindh will be made part of the official minutes to demonstrate that the province was not fully convinced with the privatisation plan of RLNG based power plants, but the Centre decided to move ahead on it.

However, the federal government high-ups argued that the Sindh government had raised objections mainly because of ongoing campaign against the PPP leadership especially on account of alleged fake accounts, so efforts were underway to create stumbling blocks in the way of this privatisation proceed that possesses potential to bring over $2billion into national kitty at a time when Islamabad was struggling for overcoming its balance of payment (BoP) difficulties. They also claimed that they had replied back to Sindh on their observations in a bid to satisfy them.

After several exchanges of official communications by federal and Sindh governments, top official of Privatisation Commission told The News that the provincial government granted conditional approval for privatising the two RLNG power plants with a condition that their observations would be made part of official minutes in which the CCI, under the chairmanship of prime minister, granted its approval for execution of this proposed privatisation.

The Sindh government made observations on discharge of water of these power plants, pricing mechanism and others and objected insertion of these RLNG based power plants into the privatisation list despite this fact that these were located in Punjab.

This scribe contacted to Chief Minister’s Sindh Adviser for Information, Murtaza Wahab, for seeking his comments last week, he said that their government was demanding of implementation on Article 158 of the 1973 Constitution. This article reads out that “the Province in which a well-head of natural gas is situated shall have precedence over other parts of Pakistan in meeting the requirements from that well-head, subject to the commitments and obligations as on the commencing day.” He said that the recent gas crisis in Sindh showed that the Centre was not fulfilling the requirement of Sindh in true letter and spirit.

He further said that they had always raised objections over pricing mechanism because Sindh was producing cheaper and sufficient gas, but it remained deprived of it for meeting its requirements.

The Cabinet Committee on Privatisation (CCOP), in its meeting held on December 26, 2018, under the chairmanship of Finance Minister Asad Umar approved privatisation of National Power Parks Management Company Limited (NPPMCL) that operates RLNG power plant of 1,233 megawatts of Balloki and 1,230MW Haveli Bahadurshah.

According to the official summary moved by the Privatisation Commission (PC) before the CCOP stating that in pursuance of the CCOP decision dated October 31, 2018 and subsequently ratified by the cabinet on November 1, 2018, regarding induction of two RLNG based power plants namely 1,230MW Havali Bahadarshah and 1,223MW Balloki in the early implementation program. Both the power plants are currently operating under the National Power Parks Management Company Limited (NPPMCL) which is owned by the Pakistan Development Fund (PDF), Government of Pakistan.

Subsequently, the Privatisation Commission Board meeting was called on November 11, 2018, for appointment of financial advisers top kick start the privatisation process. Regarding the issue concerning the transaction structure of two power plants, the representatives of NPPMCL informed the PC Board that the NPPMCL is legally one entity having two separate power facilities ie Haveli Bahadarshah and Balloki. In case the government intends to privatise these two plants separately as individual plants. So there were two options one would be demerger through court and second assets carve out. The legal team of the NPPMCL was directed to submit a working paper on these two options highlighting pros and cons which are being placed for consideration of CCOP.

Both options /processes of unbundling will be complex and time consuming. However, if both the power plants are privatised as bundle package ie privatisation of the NPPMCL, the process would be completely simple and less time consuming but investors’ appetite would be relatively reduced due to huge investments. Finally, the CCOP approved to privatise it as bundle.