The board of Privatisation Commission (PC) on Monday agreed to re-engage Credit Suisse, Singapore, for determining the price of multibillion-dollar LNG-fired power plants that Qatar wanted to buy for past three years but Pakistan’s bureaucracy seemed to be a hurdle in its way.
However, Credit Suisse has set the conditions of clearing its outstanding dues of around $1.7 million and resolving three key pending issues that have obstructed the privatisation of two LNG power plants having combined generation capacity of 2,560 megawatts.
National Power Parks Management Company Limited (NPPMCL) owns these plants on behalf of the government.
Federal Minister for Privatisation Abid Hussain Bhayo, who is also chairman of the PC board, presided over the meeting.
The board also recommended striking off two companies and 16 properties from the privatisation list, which poorly reflects on the performance of the commission and the parent ministries.
The board recommended to the Cabinet Committee on Privatisation (CCOP) to re-engage the services of Credit Suisse, Singapore, as financial advisers for selling the LNG power plants, according to the decision.
“The Privatisation Commission board unanimously approved the proposal of expediting the transaction-related matters of NPPMCL up to its successful closure,” said a statement issued by the Privatisation Commission.
Pakistan had engaged Credit Suisse in April 2019 for selling the plants. But the contract expired in October 2020, which was extended for a period of one and a half year. Reflecting the poor performance of all stakeholders, the contract expired again on April 29, 2022.
However, this month, the Prime Minister’s Office directed the Privatisation Commission to re-engage Credit Suisse for the financial restructuring and valuation of the power plants.
The directive came days before the PM was scheduled to leave for Qatar that has been keen to buy these plants since May 2019. Qatar had promised to make $3 billion investment in Pakistan, including purchasing both the plants.
Due to the urgency of the matter, Finance Minister Miftah Ismail has convened CCOP meeting on Tuesday to process the Credit Suisse hiring. Pakistan wants to extend the contract for 15 months.
Sources said that Credit Suisse was also keen to complete the transaction but this time around the firm had set a few conditions, mainly the clearance of its $1.7 million dues and the resolution of issues that were hampering the transaction for the past three years.
The consultant has demanded that the process of arranging Rs102 billion in debt from commercial banks should be completed and Pakistani stakeholders should amend the Gas Sale Agreement, Power Purchase Agreement and Implementation Agreement.
Power purchasers also owe about Rs200 billion to NPPMCL – the firm that owns the plants, which have to be settled for completion of the strategic sale.
The board also reviewed the status of Pakistan Steel Mills privatisation. The steel mills privatisation has also been lingering for the past few decades. Lately, four Chinese firms showed interest but one of them now seems to have lost interest.
In June this year, BaoSteel Group visited the plant facilities, followed by a visit by Tangshan Donghua Iron and Steel Enterprise Group last month. This month Maanshan Iron and Steel Co Ltd is expected to visit the facilities.
However, these visits will remain unproductive until Pakistani bureaucracy addresses the issues that are hampering the transaction. So far, Sui Southern Gas Company is not willing to give no-objection certificate for the transaction due to a dispute over its receivables.
This has hampered the transfer of core operating assets to a new subsidiary and the Scheme of Arrangement requirements remain unfulfilled.
On Monday, a privatisation board meeting again suggested to revive the steel mill instead of selling it.
The PC board also recommended the CCOP to defer the privatisation of Sindh Engineering Limited or delist it, if chronic issues remained unresolved.
The bureaucracy’s ill intentions to sell the entity can be gauged from the fact that its audited financial accounts are not available since fiscal year 2018.
The board also recommended striking off Pakistan Engineering Company from the privatisation list or resolve its outstanding issues. The transaction is virtually dead but people are eying its billions of rupees worth of property at a prized location in Lahore.
The board delisted 16 properties that remain unsold out of the total of 27 properties that the previous government wanted to sell to retire Pakistan’s Rs40 trillion debt, which has now increased to nearly Rs50 trillion. Ironically, the 10 properties had been sold for Rs1 billion.
A statement issued by the Privatisation Commission underlined that the privatisation board members proposed that the privatisation of PECO, Sindh Engineering Limited and sale of remaining 16 properties of the federal government should be halted on account of inherent issues faced by these entities.
Published in The Express Tribune, September 6th, 2022.
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