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A parliamentary panel has shown reservations over hiring process of financial adviser (FA) as transaction manager for privatisation of two RLNG-based power plants, i.e, 1230MW Haveli Bahadur Shah and 1223MW Balloki. The Senate Standing Committee on Privatisation met under its Chairman Mustafa Mahmud and criticised the government's decision of privatising the profitable RLNG power plants and process of appointment of FA for the transaction of two RLNG power plants.
Member Committee Faheem Khan showed his concern over selection of consortium Credit Suisse (CS), Elixir Securities (ES) & Ernst and Young Ford Rhodes (EY), Akhund Forbes, Latham & Watkins & Lummus Consultants International over consortium led by Citigroup Global Markets Ltd which quoted the lowest financial price. Credit Suisse (CS) was the 2nd highest bidder.
He further questioned the criteria for selection of FA for the transaction of two RLNG-based power plants owned by National Power Parks Management Company Private Limited (NPPMCL).
Secretary Privatisation Commission (PC) Rizwan Malik said that the other four consortiums were unhappy because they lost the bid. However, he said that not a single complaint against the selection criteria was registered in 10 days following the selection of FA.
"On March 14, 2019, evaluation report and ranking of the pre-qualified consortium were presented to the six members Evaluation Committee (EC) for their endorsement to the Privatisation Commission (PC) Board. On March 20, 2019 PC Board after thorough deliberations approved the appointment of consortium of Credit Suisse (CS)," the secretary said.
Criticising the government's decision to invite international bidders for the transaction of RLNG-based power plants, the members of the committee said that the government could fetch some dollars in short-term but it would not be beneficial in long-term.
The chairman committee said he was in favour of privatisation of SOEs but he was against to sell RLNG plants to foreign investors as short-term measure to earn some dollars. He argued it should be privatised to local investors as its tariff has government's guarantee for 15 year as per power purchase agreement. After the expiry of agreement with government, he said the buyer would take profit back home in dollars. He further suggested the power plants should be put on for strategic sale.
The secretary argued that transaction manager would advise the government about the market value for the sale of the RLNG plants. If PC succeeded in privatising the both RLNG plants, it would also consider the Punjab government's request to privatise their two plants.
The committee was further informed that the plants would be sold above $ 2 billion which has 80 percent foreign component and 20 percent local. The annual return of the plants was Rs 3 billion which is 16 percent.
The secretary privatisation stated that the government wanted to sell the power plants before they would become inefficient in public sector.
However, Dhanpat Kotak Project Director at NPPMCL said that the efficiency and maintenance of the power plants could be ensured following the laid down guidelines of National Electric Power Regulatory Authority (NEPRA).
Responding to a question, the secretary said that the government has adopted three strategies to address the problem being faced by government in connection with state-owned entities (SOEs). To find strategic partner for loss making SOEs, strengthen the portfolio of entities in capital market and restructuring the SOEs through 'Sarmaya Pakistan Fund.'
He further said that Adviser to Prime Minister on Institutional Reforms and Austerity Dr Ishrat Hussain is working on the reforms in the government institutions. The secretary said that he had suggested decreasing the size of ministries, divisions and attachments departments from 444 to 300 to bring improvement in their performance.

Copyright Business Recorder, 2019

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