Economic Coordination Committee approves fast-track sell-off of 2,400MW power plants

ISLAMABAD: Government on Friday approved the privatisation of 2,400 megawatts of re-gasified liquefied natural gas (RLNG) plants on fast-track basis and assured capacity payments in line with the power purchase agreement even after the sell-off.

The Economic Coordination Committee (ECC) of the cabinet took the decision during a meeting presided over by Adviser to the Prime Minister on Finance and Revenue Hafeez Shaikh at the Q Block.

The ECC allowed the Privatisation Commission to fast-track the privatisation of National Power Parks Management Company (NPPMCL).

The government in December last year approved privatisation of two combined-cycle gas-fired power plants, which include one, located in Balloki, Kasur, with 1,223MW capacity, and another one, situated in Haveli Bahadur Shah, Jhang, with 1,230MW plant. NPPMCL currently owns and operates the power plants and the company is wholly-owned by the ministry of water and power. The committee said the issues related to review and adjustment of risk allocation under the power purchase agreement would be considered again in the next ECC meeting for a final decision.

The ECC said the change in the percentage of gas supply to the plants managed by the NPPMCL would not affect the privatisation of the company, as the capacity payments of both the plants were ensured under the power purchase agreement.

“Therefore, the ECC decided that Privatisation Commission should go ahead with its transaction,” the finance ministry said in a statement.

The ECC further said the reallocation of gas to other sectors could be considered in the next meeting wherein a detailed proposal in this regard would be presented by the commission.

The government is expecting to generate $2 billion by privatising these two power plants. The transaction has been included in the active list of privatisation. Other state-run entities included in the list are Guddu Power Plant (747MW) – Central Power Generation Company Ltd (Genco-II), Nandipur Power Plant (425MW) – Northern Power Generation Company Ltd (Genco-III), House Building Finance Corporation, Oil and Gas Development Company Limited, Pakistan Petroleum Limited, First Women Bank Limited, Heavy Electrical Complex, Pakistan Engineering Company, Sindh Engineering Limited and Pakistan Re-Insurance Co Ltd..

Engineering procurement and construction contracts for the RLNG projects were awarded in the last quarter of 2015 and operation and maintenance contracts for both the plants were awarded within 18 months of ground breaking. Haveli Bahadur Shah began combined cycle commercial operations in May 2018 and Balloki achieved combined cycle commercial operation in July 2018.