Govt okays selection of Credit Suisse led consortium as adviser

Islamabad : The government on Wednesday granted approval for selection of consortium led by Credit Suisse as financial adviser with payment of fee of approximately $11.6 million for undertaking strategic sale of two RLNG based power plants of 2,453MW in order to fetch around $02 billion into national kitty.

The PTI led government wants to privatise 1,223MW of Balloki Power Plant and 1,230MW Haveli Bahadur in order to fetch at least $02 billion into the kitty before June 30, 2019, but the official sources said that it might not be possible to achieve this deadline with regard to this important transaction.

“This transaction is expected to take place in the first half of the next financial year 2019-20,” said the top official on the condition of anonymity. So the dreams of getting solace on account of restricting the budget deficit at around 6.2 percent of GDP might exceed because this transaction is unlikely to be done before June 30 deadline.

Out of total shortlisted parties, the government evaluated bids on technical and financial grounds as there is very minor difference of scores in first and second bidders, but the opening up of financial bidding helps for selecting the consortium led by Credit Suisse as financial adviser to undertake this important transaction, top official sources confirmed while talking to a select group of reporters after holding of Privatisation Commission’s Board meeting on Wednesday night.

The shortlisted parties included (1) Consortium of Citigroup Global Markets Limited, United Bank Limited, HaiderMotaBNR & Co and Fichtner, (2) Constortium of Standard Chartered Bank, CITIC CLSA Alfalah Group, AKD Securities Ltd, AF Ferguson & Co, Poyry Switzerland Ltd and ORR Dignam & Co, (3) Consortium of Credit Suisse, Alixir Securities, Earnest & Young Ford Rhodes, Lummus Consultants International, Akhund Forbes and Lathan & Watkins, (4) Constorium of JP Morgan, China International Capital Corporation Ltd, Habib Bank Limited, BDO, Sargant & Lundy, Vellani and Freshfield, (5) Consortium of Lazard Freres & Co, Next Capital Ltd, Grant Thorton, HRSG Consulting, Power Invest, Nespak, Bridge Factor, Mohsin Tayebaly & Co and White & Case.

The PC Board after thorough deliberations on Wednesday approved the appointment of consortium led by Credit Suisse as financial adviser for the rivatisation of two power plants owned by National Power Parks Management Company Limited (NPPMCL) with subject to successful finalisation of Financial Advisory Services Agreement.

The Citigroup led consortium gave the lowest bid of close to $10 million and the Credit Suisse at $11.6 million and JP Morgan at $17.5 million. After evaluating all aspects, the PC Board granted approval for Credit Suisse as financial adviser and sought verification from SECP for checking their credentials and got satisfactory report except some minor observations. This consortium was not eligible if the transaction was being done through stock market, but it was fully compliant for strategic sale. The capital adequacy requirement stood at Rs05 million, but its CA showed in the range of Rs48 million. “We got affidavit from the successful bidder that if he found involved in any inquiry or case before NAB or FIA or FBR, it would stand disqualified,” said the official.

The official said that they established Grievance Redressal Committee in line with compliance of PPRA rules to remove all complaints on the selection of financial adviser in 10 days if anyone possessed any valid objection in order to ensure transparency.

“We have fully complied all PPRA regulations for hiring of financial adviser and other statutory bindings in arriving at fair and transparent following the relevant provisions of regulatory framework prescribed for the purpose, including approval of Council of Common Interest (CCI) in this regard,” said the official. Privatisation Commission Secretary Rizwan Malik told reporters that the government established a steering committee under the chairmanship of minister of privatisation to oversight this whole transaction in order to undertake this strategic sale in transparent manner.