As power sector’s privatisation programme moves ahead painstakingly, the Privatisation Commission (PC) board on Friday approved the award of seven contracts for financial advisory services for selling five power distribution and two power generation companies.
A consortium led by Jehangir Siddiqui (JS) Global bagged four contracts, outbidding its competitor – AKD Securities’ consortium.
The PC board approved financial advisers for the privatisation of Hyderabad, Sukkur, Quetta, Peshawar and Multan power distribution companies. It also awarded advisory contracts for the privatisation of Lakhra Power Generation Company and Central Power Generation Company.
In October 2013, the Cabinet Committee on Privatisation had approved an early implementation of the privatisation programme designed for 39 public sector enterprises (PSEs). These included nine power distribution companies and four power generation companies.
The privatisation of power companies is said to be more complex and faces almost similar issues. The government wanted to first privatise Faisalabad Electric Supply Company (Fesco) by August this year, but the timeframe has now been pushed to the end of December.
There were delays in seeking the National Electric Power Regulatory Authority’s (Nepra) approval for multi-year tariffs and conducting technical due diligence of Fesco, said PC Chairman Mohammad Zubair while talking to The Express Tribune.
He said the issues had been resolved and the company would be sold by December. In order to make it attractive for prospective buyers, Nepra would approve a five-year tariff plan, he said.
“To address employee concerns, a ministerial committee is also negotiating with the labour union.”
After Fesco, the Lahore Electric Supply Company and Islamabad Electric Supply Company are the next in line.
The PC board on Friday approved the appointment of a top-ranked consortium of JS Global as financial adviser for the Hyderabad, Sukkur and Quetta power distribution companies.
JS Global, with Fieldstone and Burj Bank as partners, also grabbed the contract for advisory services for the sale of Lakhra Power Generation Company. It will get Rs580.3 million in consultancy fee for the four companies.
The government will pay a fee of Rs141.3 million to JS Global, much lower than Rs365.5 million quoted by the consortium of Guernsey, which included AKD Securities, for Hesco. JS Global will receive approximately Rs123.4 million for advisory services for the Sukkur power distribution company, much lower than Rs362.7 million quoted by the consortium of Guernsey.
The government will pay about Rs211.5 million to JS Global against Rs453.8 million quoted by the consortium of Guernsey for the Quetta power distribution company.
For the privatisation of Lakhra Power Generation Company, four parties had submitted technical and financial bids. These included the consortium of JS Global, consortium of Bridge Factor, consortium of Guernsey and consortium of UBL and Ernst and Young (EY). However, the consortium of JS Global scored the highest with 95.9 points, followed by UBL-EY consortium with 90.9 points. The government will pay Rs104.1 million in consultancy fee to the top-ranked consortium.
The PC board approved the consortium of National Bank of Pakistan, MAS Clear Sight, Bridge Factor and Topline Securities for the privatisation of Peshawar Electricity Supply Company. The government will pay Rs150.8 million in consultancy fee to Bridge Factor.
Six consortia had submitted technical and financial bids for financial advisory services for the privatisation of Central Power Generation Company. The PC board approved the consortium of United Bank Limited, Ernst and Young, Lahmeyer Group, Pakistan Engineering Services (Private) Limited, Haider Mota BNR and Excelerate with a score of 91.72. It will charge a fee of Rs226.6 million.
The second-ranked consortium of JSGCL, FieldStone and Burj Capital had quoted Rs132.7 million in fee but lost to the top-ranked consortium with a thin margin. Its cumulative score was 90.29, just 1.43 points less than that got by the UBL-EY consortium.
Published in The Express Tribune, May 30th, 2015.
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