The Cabinet Committee on Privatisation (CCOP) has approved privatisation of two LNG based power plants as "Bundle Package" by privatising National Power Park Management Company Limited (NPPMCL) that operates both the power plants. A meeting of the CCOP presided over by Finance Minister Asad Umar also accorded approval to divestment of residual government shares of 18.39 % in Mari Petroleum Company Ltd.
A statement issued after the meeting said that with a view to facilitating simultaneous and smooth privatisation of both RLNG plants, the CCOP gave its nod of approval for privatisation of the National Power Park Management Company Limited (NPPMCL). However, sources said that legal experts' opinion was that privatisation of two power plants as separate entity would be time consuming as NPPMCL that operates them is one entity and process for privatisation of two power plants as bundle package that is privatisation of NPPMCL will be simple and less time consuming.
The NPPMCL was established by the federal government to operate two re-gasified liquefied natural gas (RLNG) based power generation plants at Balloki, district Kasur, and Haveli Bahadur Shah, district Jhang, with capacity of 1223 MW and 1230 MW.
Secretary Privatisation Division gave a briefing to a meeting chaired by Finance Minister Asad Umar on Wednesday on an update on privatisation process of public sector entities on the active privatisation list including RLNG Power Plants (Balloki and Haveli Bahadurshah) under National Power Parks Management Company Ltd (NPPMCL), Lakhra Coal Mines and Services International Hotel. Matters relating to divestment of government's residual shares in Mari Petroleum Company Ltd also came under discussion.
Sources said that the secretary privatisation informed the meeting that in pursuance of CCOP decision of October 31, 2018 and subsequently ratified by the federal cabinet on November 1, 2018, two R-LNG based power plants namely - 1230 MW Haveli Bahadur Shah and 1223 MW Balloki - were included in the "early implementation programme". The meeting was further stated that both the power plants are currently operating under the National Power Parks Management Company Limited (NPPMCL), which is owned by the Pakistan Development Fund (PDF), government of Pakistan. Subsequently, Privatisation Commission (PC) Board meeting was called on November 11, 2018 for appointment of financial advisors to kick start the privatisation process.
Regarding the issues concerning the transaction structure of two power plants, the representatives of NPPMCL informed the PC Board that NPPMCL is legally one entity having two separate power facilities - Haveli Bahadur Shah and Balloki - and if the government wants to privatise these two plants separately, as individual plants, there would be two options. (a) De-merger through Court; (b) Asset carve-out.
The legal team of the NPPMCL was directed to submit a working paper on the aforementioned options highlighting pros and cons, which are being placed for consideration of the CCOP. The CCOP was told that both options/processes of unbundling will be complex and time consuming. However, if both the power plants are privatised as bundle package i.e. privatisation of NPPMCL the process would be comparatively simple and less time consuming but investor's appetite would be relatively reduced due to huge investment.
In case of Lakhra Coal Mines, the CCOP directed that since the matter is sub judice, its privatisation process may be pursued only after a decision by the Supreme Court. The meeting of the CCOP also noted the updated position on KE as shared by the secretary privatisation.