The Cabinet Committee on Privatisation (CCoP), which is scheduled to meet on August 5, 2011 under the chairmanship of Finance Minister Dr Abdul Hafeez Shaikh, is expected to approve divestment of 88 percent shares of profit earning National Power Construction Company (NPCC), sources close to Privatisation Minister told Business Recorder.
The NPCC was established in 1974 by the Government of Pakistan under the Ministry of Water and Power. NPCC is registered under the Companies Ordinance, 1984 and has its branch office in Saudi Arabia in the name of NPCC (Pakistan) Limited, registered under Foreign Capital Investment Regulations. The company undertakes execution of large power construction projects including high and low voltage lines, distribution networks and electrification of large housing and commercial projects on turkey basis in Saudi Arabia.
The CCoP, in its meeting held on February 3, 2011 had approved re-activation of privatisation process of NPCC under any appropriate mode ie public private partnership or strategic sale on the recommendation of PC Board. KASB Bank was hired as Financial Advisor (FA) to conduct the transaction and, based on its due diligence exercise, FA has proposed following two options for strategic sale of NPCC: (i) sale of 88 percent shares; or (ii) sale of 51 percent shares.
Moreover, the FA has recommended Option -1 whereby PC can proceed with a strategic sale of 88 percent GoP shares in NPCC on "as is where is" basis. However, the remaining 12 percent shares of the company are proposed to be allocated to the employees under the controversial Benazir Employees Stock Option Scheme (BESOS).
After detailed discussions, the PC Board in its meeting held on July 21, 2011 had recommended sale of 88 percent shares of the company. According to official documents, the PC fears negative publicity in the press and at the same time accepts that the company will potentially move outside Pakistan which would imply loss of taxation for GoP. Currently, NPCC employs a large number of Pakistani nationals and divesture would result in the loss of remittances from these employees.
The documents further say that the PC Board was informed that the Privatisation Commission has already taken initiative to privatise the NPCC. Pursuant to the PC Board meeting dated April 23, 2010 Expressions of Interest (EoIs) have been invited for appointment of Financial Advisor (FA) for inviting fresh EoIs from local and foreign qualified investors for optimal divestment of GoP shares in NPCC. The Board was informed that 7 parties submitted their EoIs to act as Financial Advisor for NPCC transaction. However, one party, namely AKD Securities Limited, was not interested in the transaction.
The interested parties are: Anjum Asim Shahid Rahman, AKD Securities Limited, Consortium of [KASB Securities, [Riaz Ahmad & Company, CA], [Barqaab Consulting (Private) Limited] and [Mohsin Tayebaly & Co] UHY Hassan Naeem & Co, Consortium of [Invest Bank's], [KPMG], [Mohsin Tayebaly & Co] , Consortium of [Khalid Majid Rehman (Chartered Accountants)], [Khan & Piracha (Corporate & Law Experts)], [MEC Consult (Management & Engineering Consultants)] and Consortium of [Habib Bank Limited], (Ernst & Young Ford Rhodes Sidat Hyder.], [Haider Mota & Co] & [Foundation Securities]. According to Managing Director, NPCC's operational as well as financial viability is on the right track.
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