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Saturday December 04, 2021

Commercial loans to replace govt equity in NPPMCL

August 12, 2021

ISLAMABAD: The Privatization Commission Board on Wednesday gave approval for commercial loans from local banks to replace excess government equity and loan in the National Power Parks Management Company Limited (NPPMCL).

The PC board that met with Federal Minister for Privatisation Muhammadmian Soomro in the chair discussed various issues pertaining to NPPMCL, Jinnah Convention Center (JCC) and corporatisation of State Life Insurance Corporation (SLIC).

It was informed that the privatisation of two power plants (Haveli Bahadur Shah and Balloki) of NPPMCL is at an advanced stage, but in order to align the capital structure with the tariff, 70 percent of the project cost would be based on long-term financing. As per allowed benchmark, long-term financing requirement, including repayment/ adjustment of federal government guaranteed loan, presently stands at Rs103.765 billion.

The matter relating to long-term financing arrangements and its capital structure with NEPRA’s determined tariff and repayment of government loans, State Bank of Pakistan and local banks were contacted for commercial borrowing.

A committee to that effect was also constituted by the Competition Commission of Pakistan (CCoP) to resolve the matter, a statement issued by the Privatisation commission said.

The debt re-capitalisation and refinancing of NPPMCL from the local banks, the formal approval would now be sought from CCoP. The board terms would be followed, including expression of interest (EoI) to be invited from scheduled banks and DFIs through an amount of Rs103.765 billion for a period up to 7 years (aligned with NEPRA’s debt schedule) as per the regulator’s determined tariff maximum of KIBOR + 1.8 percent.

The standard security package, including charge over assets and cash flows of NPPMCL would be without any recourse to the government of Pakistan. The scheduled banks and DFIs, who submit EoIs would be issued request for proposal. The transaction committee for NPPMCL in its recent meeting agreed upon the scheme for local financing ahead of equity process in the transaction.

The PC Board recommended the scheme of debt-recapitalisation and refinancing of NPPMCL in line with the recommendations of transaction committee.

The PC Board approved the list of 12 potential bidders/investors who have shown interest in the JCC transaction. The pre-qualified parties would be allowed for due diligence of the JCC property to participate in the bidding process subsequently.

The matter relating to the corporatisation of SLIC was also discussed. CCoP and Federal Cabinet approved the divestment of up to 20 percent of government’s shares in the corporation.

In order to proceed further with divestment of 20 percent of shares of SLIC in the proposed privatisation, the corporatisation of SLIC is a pre-requisite. The Ministry of Commerce would proceed for corporatisation and related legislation in the matter.

The PC Board decided to take up the matter with CCoP being a competent forum.