Privatisation of 2 RLNG power plants: PC to seek Ministry's opinion on role of CCI

Privatisation Commission is to seek legal opinion of Law Ministry on the role of Council of Common Interests (CCI) in privatisation of two Re-gasified Liquefied Natural Gas (RLNG) power plants, official sources told Business Recorder. The decision was taken at a meeting of Cabinet Committee on Privatisation (CCoP) held on October 31, 2018 under the chairmanship of Finance Minister, Asad Umar.
The CCoP approved following PSEs for active privatisation program: (i) SME Bank Limited ;(ii) First Women Bank Limited;(iii) 1233 MW Balloki Power Plant ;(iv) 1230 Haveli Bahadar Power Plant;(v) Jinnah Convention Centre, Islamabad ;(vi), Lakhra Coal Mines (now Lakhra Coal Development Company);(vii) Services International Hotel, Lahore and ;(viii) Mari Petroleum Limited ( divestment of remaining shares).
The sources said, CCoP directed Privatisation Division to immediately initiate the process for privatisation of 1233 MW Balloki Power Plant and 1230 MW Haveli Bahadar and complete it by June 1, 2019. The cost of both projects is around $ 1.6 billion with 30 per cent rate of return but the intent is not to sell these projects for less than $ 2 billion.
CCoP also directed the Privatisation Division to obtain legal opinion of the Law and Justice Division on whether or not approval of the CCI was required for privatisation of the RLNG plants. According to sources, CCoP also decided that PSEs in power sector will be phased in, in the light of policy recommendations by the recently constituted task force on energy reforms.
Privatisation Division informed the meeting that privatisation of public sector enterprises has been a key component of economic reforms of successive governments. The objective of the program was to reduce the government's direct role in commercial and industrial activities by promoting private sector to play a leading role in economic development.
The meeting was further informed that Privatisation Commission (PC) under the supervision/ oversight of the Cabinet Committee on Privatisation (CCoP), has undertaken privatisation of PSEs under an approved legal framework in accordance with PC Ordinance, 2000 and rules, regulations and procedures framed thereunder. PC had conducted 172 privatisation transactions since 1991, generating proceeds of approximately Rs 649 billion.
Privatisation Division stated that in order to explore the private sector's capital and managerial potential for sustainable economic growth and development, the PC Board in its meeting held on October 30, 2018 reviewed the list of PSEs including the privatisation program of 1997 which subsequently was-re-affirmed by the Council of Common Interests (CCI) in 2006. The CCoP approved inclusion of 11 PSEs in the active list of privatisation program on the basis of following rationale: (i) attracting private sector partnership to turn around ailing PSEs by injecting capital, modernizing through technological up-gradation besides introducing best corporate governance practices; (ii) unlocking the inherent commercial potential of selected PSEs by bringing in strategic partners with leading industry experience; and (iii) strengthening the domestic capital market, by divesting GoP equity stakes in the selected PSEs to attract Foreign Portfolio Investment (FPI) and domestic institutional and retail investors to build a diversified and high quality shareholders base.
It was also decided to introduce regulatory framework to facilitate listing of infrastructure backed investment trusts and pre-privatisation restructuring of selected PSEs for successful privatisation.
During the ensuing discussion, it was suggested that certain principles and parameters for privatisation should be formulated in order to make the privatisation program successful and transparent. It was also observed that those PSEs which are suffering loss may be restructured in the first instance in order to put them in competitive process. In case they do not ameliorate their financial and management position they may be considered for privatisation.
It was asserted that the entities which are catering for social uplift, reduction in poverty and providing assistance to the marginalized segments of society may not be privatised in the public interest. Similarly, the entities of strategic importance may also be delisted for privatisation program.
Finance Minister observed that the process of divestment was meant to encourage and attract private sector partnership to turnaround ailing PSEs by injecting capital, modernizing through technological up-gradation besides introducing best corporate practice.