The Privatisation Commission (PC) has shelved the sell-off plan of Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) until critical issues, including tariff are resolved, official sources told Business Recorder.
"Policy issues should be settled so that information can be provided to the bidders through fresh EoIs in the light of Supreme Court''s judgement in Pakistan Steel Mills," sources quoted PC officials as saying. This was decided at a meeting presided over by Prime Minister Shaukat Aziz.
Giving the background, sources said that the Economic Coordination Committee (ECC) of the Cabinet had considered several options to privatise the gas companies but decided to go ahead for sell-off in their existing integrated form. In the light of the ECC decision, the PC had invited Expressions of Interest (EoIs) for the two companies.
Sources said that there was overwhelming interest in the two transactions owing to the successful marketing campaign undertaken by the PC and Financial Advisor. Consequently, 17 Statements of Qualification (SoQs) were received for each, of which, 13 bidders were common to both.
They said that presently pre-qualification of bidders is in hand. However, the momentum of the transactions has been thwarted owing to pending resolution of various critical issues, including tariff, third-party access (TPA) regime, vertical integration, and Interstate Gas Systems Limited (ISGSL).
On the issue of TPA, the Ministry of Petroleum and Natural Resources has been pursuing finalisation of this regime for which it has engaged World Bank (WB) consultants. Subsequently, the Ministry circulated a summary to the ECC, which was forwarded to the PC for comments.
Regarding tariff regime, the Oil and Gas Regulatory Authority (Ogra) had circulated a new proposed tariff regime in the last quarter of 2005, which is still to be finalised. The PC is of the view that as tariff is the basis for valuation of the companies, it should be finalised well before the bidding, sources said, adding that the issue is under active consideration of the Petroleum Ministry.
On the issue of cross-ownership, sources said that the Petroleum Ministry has strong views about allowing upstream and downstream players to participate in the privatisation.
Sources said that PC is also of the view that ISGSL, which is jointly owned by both companies and was entrusted with the job of cross-border pipelines, should be separated from the two companies. The proposal would be submitted to the ECC as concerned ministries have submitted their comments.
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