Govt continues to prioritise privatisation of two RLNG-based power plants

ISLAMABAD: The Privatization Commission on Saturday said that despite COVID-19 situation, it has continued to keep foreign investors engaged in the government’s privatisation plan for state-run entities, including two RLNG-based power plants.

Federal Minister Muhammadmian Soomro along with the Advisor to PM on Energy, Nadeem Baber held a series of video-conferences/meetings during the current week with pre-qualified investment parties for the privatisation of Haveli Bahadur Shah and Balloki power plants.

National Electric Power Regulatory Authority (NEPRA) chairman also joined the discussion, while Baber replied to questions raised by the investors.

The privatisation of the two power plants, run by National Power Plant Management Company Limited (NPPMCL), was being carried out on priority basis. The impending legal and technical issues have been sorted out amicably with the provincial governments and line ministries.

These include true-up tariff by NEPRA, amendment in land conversion rules and water use agreement for power plants by government of Punjab, and alignment of gas supply and power purchase agreements by Power Division and Petroleum Division in the context of RLNG agreements, prevalent till 2025.

The relevant information has been uploaded on Virtual Data Room (VDR) for due diligence by the pre-qualified bidders. Presently investors’ due diligence was in progress, but physical site visits of the pre-qualified bidders could not be scheduled due to the current national and international lock-down situation and travel restrictions.

In the wake of the pandemic, the pre-qualified bidders have asked for extension in the timelines. The federal minister has indicated to review/reconsider the timelines based on facts/situational analysis and rapidly changing national and international market scenarios.

Soomro also said the revival of Pakistan Steel Mills (PSMC) was one of the most important objectives of the Ministry of Privatisation.

Financial Advisors’ Services Agreement (FASA) was signed in January this year with Pakistan-China Investment Company and Bank of China (BoC). The progress towards this end was steady pace, he added.

“In spite of travel advisories and other issues, and at the insistence of the Privatization Commission, Sinosteel team from China has recently been on visit to Pakistan,” he informed.

All matters regarding legal, financial and land issues of PSM have been discussed with concerned stakeholders. The first draft of HR, financial and tax due diligence has been shared by the financial advisors on April 1, 2020, the minister said.

“The draft DDs on HR financial and tax have been shared with the Ministry of Industries and Production and Management of Pakistan Steel Mills on April 2, 2020 for their review and inputs before placing the DDs and proposed transaction structures for approval of competent forum.”

Likewise, SME Bank Privatisation was also at conclusion stage. Prequalification of five investors who have submitted their SOQs was likely to be completed by next week and buyers side due diligence would be completed by end of May provided current pandemic situation improves to some extent.

Furthermore, transaction structures of Services International Hotel and divestment of Pak re insurance shares have been finalised.

However, strategy was being devised in consultation with financial advisors to market both these transactions in due course of time, depending on the prevailing market conditions and economic situation.