Planned sell-off of two RLNG plants: PC to take up matter with ECC

The Privatisation Commission will take up the sell-off of two newly-established RLNG power plants - Haveli Bahadur Shah and Balloki power projects of 1,320MW each - under National Power Parks Management Company Ltd (NPPMCL) with the Economic Coordination Committee (ECC) of the Cabinet, sources said.

The decision to privatize these two power plants dates back to the previous administration and on 15 September 2019, Adviser to Prime Minister on Finance, Dr Abdul Hafeez Shaikh gave end-December 2019 deadline for the completion of the transaction. The projected amount to be generated from the sale has been estimated at Rs 300 billion. Hiring a Financial Advisor for the privatisation of NPPMCL was initiated in January 2019 and the agreement with the FA consortium of Credit Suisse, Elixir Securities, EY Ford Rhodes, Akhund Forbes Hadi, Latham & Watkins and Lummus Consultants International was signed on April 30, 2019.

Five meetings of the transaction committee have so far been held and various issues of NPPMCL transaction have been highlighted for resolution, sources added.

The PC observed that key issues need to be resolved before inviting Expression of Interest (EoI) from potential investors which are: (i) Central Power Purchasing Agency Guaranteed Ltd (CPPA-G) should ensure that a certain reasonable percentage of off-take be contained in the revised Power Purchase Agreement (PPA); (ii) Gas Supply Agreement (GSA) with SNGPL be reviewed on the basis of observations from CPPA-G to mitigate their risk; (iii) existing risk matrix in relation to Pakistan political force majeure for non-supply of gas be retained in PPA; and ( iv) Gross Calorific Value (GCL) of future LNG gas supplied should be confirmed by SNGPL to the company and action take accordingly.

On September 17, 2019, the PC Board reviewed the transaction structure of privatisation of NPPMCL and recommended that: (i) 100 per cent of the company be divested as a strategic sale for consideration that it would attract major investors in Pakistan's power sector; (ii) first option is to de-merge the two plants as per the Companies Act, 2017 preferably through SECP, as it may save time; and (iii) both the plants must be sold together which may take less time though it would reduce competition.