Privatisation plan underway despite virus-led uncertainty

ISLAMABAD: Proposed privatisation of Pakistan Steel Mills, RLNG power plants, and Heavy Electrical Complex have entered the advance stages after the government received drafts of due diligence from financial advisers appointed for the divestment from the state-owned entities.

Officials on Tuesday said Minister of Privatization Mohammadmian Soomro along with his team is working on the ongoing privatisation plan steadily. The financial advisers appointed for Pakistan Steel Mill (PSM) have already submitted the first draft of due diligence report, which subsequently was reviewed by the transaction committee.

“First meeting to that effect was held on April 15th this year via video link owing to current pandemic which was followed by second review meeting on 23r April,” an official said.

The government is also approaching potential partners for the revival of PSM. Under the plan, the strategic partner would bring in operating/working capital to start the mills, operate and expand the capacity to three million tons from existing 1.1 million tons. An estimated investment ranging from $500 million to $1 billion is required to revive the PSM and enhance its production capacity. The privatisation of Heavy Electrical Complex is also underway and revised draft of due diligence was received on April 22, 2020. This has pushed the timeline for all succeeding deliverables by a month.

“The COVID-19 impact on transaction implementation is currently uncertain but transaction structure is to be formalised so that it can be launched for implementation, quickly post-COVID,” said an official. “The COVID-19 has impacted the pace of ongoing transactions but the work on all fronts have been carried out with requisite precautions, and it is expected that after the pandemic ends the desired pace to complete the transactions will be attained/resumed.”

The privatisation of power plants of Haveli Bahadar Shah and Balloki is also at an advanced stage. The privatisation of the two 2,400 megawatts of RLNG-run power plants, run by National Power Plant Management Company Limited, is being carried out on priority basis.

The privatisation commission and financial advisers are working with pre-qualified parties and their advisers to complete buyer-side due diligence. Virtual data room has already been established by the commission to provide required information to investors to participate in the pre-bid meeting, which would be convened with mutual consent soon.

Moreover, conference calls are repeatedly being arranged by privatisation commission to answer the queries of investors and to furnish them with requisite information and assistance to proceed with the transaction.

Work on Guddu and Nandipur power plant is also in progress and due diligence by the advisors is actively being pursued.