National Power Parks Management Company owns the Haveli Bahadur Shah and Balloki power plants, which have combined production capacity of 2,453 megawatts. PHOTO: FILE
The commission, in a meeting held last week, questioned the Ministry of Privatisation and the Ministry of Energy over the closure of Pakistan Steel Mills (PSM) and the decision to privatise LNG-fired power plants, said sources in the Ministry of Finance.
Haveli Bahadur Shah and Balloki power plants, which were based on LNG, were set up during the tenure of previous Pakistan Muslim League-Nawaz (PML-N) government in a bid to end load-shedding in Punjab as soon as possible.
One of the questions that the commission asked was about the fate of electricity supply at the time of war, sources said.
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The commission’s demand for details of LNG power plants appeared to be surprising as no foreign or domestic loans had been taken for their construction. Questions have not been raised in the past about any kind of wrongdoing in these power plants.
The commission did not inform the Ministry of Energy and Ministry of Privatisation about the motive of investigating the planned privatisation transactions, the sources said.
Government-controlled National Power Parks Management Company Limited (NPPMCL) owns the Haveli Bahadur Shah and Balloki power plants, which have combined production capacity of 2,453 megawatts.
The Pakistan Tehreek-e-Insaf (PTI) government had decided to privatise both these plants aimed at raising over a billion dollars.
The commission questioned the privatisation and energy ministries hardly 10 days before a planned visit of foreign investors to Pakistan to seek details of these power plants.
The sources said representatives of Japanese, Malaysian and Qatari companies met on Tuesday with Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh and the privatisation minister and sought details of the privatisation process of these plants.
The debt commission’s move to investigate both the power plants may create hurdles as the government is already struggling to attract foreign direct investment due to deepening political instability.
The commission sought information from the Privatisation Commission under Section 9 of the Pakistan Commission of Inquiry Act 2017. The Privatisation Commission has provided details of the financial advisory services agreement and NPPMCL accounts to the commission.
The government has already hired a consortium of financial advisers, which is currently in the process of completing due diligence of the power plants. Once the due diligence is done, the financial advisers will propose a transaction structure to suggest whether the plants should be sold as a bundle or offered separately to the investors.
If the financial advisers recommend the sale of 100% stake, the government may fetch $1.5-2 billion. But actual receipts will depend on the market appetite.
Prime Minister Imran Khan has set up the commission to probe the loans taken by Pakistan Peoples Party (PPP) and PML-N governments during their tenures. Terms of reference of the commission include determination of the significance of major infrastructure or public sector development work undertaken from 2008 and compare it with the increase in public debt from Rs6.6 trillion to Rs30.8 trillion till September 2018.
Members of the commission questioned the rationale behind setting up the LNG power plants when they were to be privatised, said the sources.
The commission ventured into the privatisation plan despite no loan was acquired for the construction of these power plants. The projects were financed through the Public Sector Development Programme (PSDP).
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Subsequently, in 2017, the then government sold the equity of these projects to Pakistan Development Fund aimed at generating non-tax revenues to lower the budget deficit.
A Power Division official asked commission members to look into minutes of meetings of the Cabinet Committee on Energy and Cabinet Committee on Privatisation to find answer to the question about the purpose of setting up the plants, the sources said.
Commission members also asked about the transaction structure and the process of hiring financial advisers. The privatisation ministry has already provided details of the hiring process of financial advisers to the National Accountability Bureau.
The commission did not focus much on PSM, which had remained closed for the last four years. Members of the commission only questioned the rationale behind giving salaries to PSM employees when the country’s largest industrial unit had been closed since 2015. The privatisation ministry has already given an advertisement in the press for hiring financial advisers to “solicit partnership through a suitable mode for the revival of PSM”.
Published in The Express Tribune, August 8th, 2019.
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