The Cabinet Committee on Privatisation (CCoP), headed by Advisor to Prime Minister on Finance, Shaukat Tarin, has reportedly approved Rs 857 per share as reserve price for National Power Construction Corporation Limited (NPCC) under Discounted Cash Flow (DCF) method based on 12.75 percent discount rate with 5 percent terminal growth rate, sources told Business Recorder.
The NPCC, which was incorporated in 1974, is a fully state-owned company. It specialises in speedy execution of high-tension power transmission projects in Kuwait/Saudi Arabia. At present, the corporation has been awarded the contract for construction of 380 Kv overhead transmission lines associated with Makkah West and Madina East.
NPCCs interconnections have a total estimated value of Saudi riyals 257.652 million (Rs 5524.06 million). Since its inception, the corporation has successfully executed contracts valued at Rs 153.200 million within Pakistan and Rs 51,333.608 million (Saudi riyal 2394.29 million) in Saudi Arabia and Kuwait. The committee, which met on June 2, 2009, was informed that for privatisation of the corporation two efforts were made in the past. The CCoP had approved the reference price of Rs 241 per share in 2002, and Rs 422 per share in 2006, which did not materialise at the time.
Under the new privatisation policy approved by President Asif Ali Zardari a couple of months ago, ie public-private partnership (PPP), Expression of Interest (EoI) for acquisition of 51 percent shares of the corporation was advertised thrice and the last advertisement was released on May 5, 2008.
Six potential investors were pre-qualified for the bidding process. They were: (i) Pak Elektron Limited (PEL), Lahore; (ii) ICC (Pvt) Limited, Lahore; (iii) Al-Tuwairqi Steel Mill Ltd, Karachi; (iv) Saudi Cable Company (SCC) Saudi Arabia; (v) ZAD Investment Company, Saudi Arabia; and (vi) Alfanar Construction Company, Saudi Arabia.
According to sources, Privatisation Commission (PC) had appointed Riaz Ahmad & Company, Chartered Accountants, Lahore, to carryout updation of the valuation of the corporation. The valuer carried out the valuation based on two methods: assets based method and Discounted Cash Flow (DCF) method. The value per share as per assets based method has been calculated by the company as Rs 343.94 per share; whereas under the DCF method, the value per share has been calculated at Rs 856.92.
During discussion in the CCoP, it was observed that the NPCC was a profit earning corporation and its performance during the current year appeared promising. Hence, its privatisation may be reviewed. In response, it was clarified that the process of privatisation had been completed with the consent of management of the corporation, which was fully involved at every stage of the process. Moreover, the corporation had been on the privatisation list since 2000.
Sources said that the Ministry of Water and Power and the NPCC management had attempted to block the sell-off of the entity but Privatisation Commission, backed by Finance Ministry, was not willing to shelve the process. It is also pertinent to note that NPCC is also the facilitator of those Water and Power Ministry officials who visit Saudi Arabia, or go to perform Umrah.
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