CCoP defers privatisation of Haveli Bahadur Shah, Balloki power projects

ISLAMABAD: The Cabinet Committee on Privatization (CCoP) on Monday deferred its decision on sale-out of 1,230 MW Haveli Bahadur Shah and 1,223 MW Balloki power projects by constituting a subcommittee to finalise the transaction structure.

The CCoP also deferred its decision regarding shareholding structure of Pakistan Credit Guarantee Company. The CCOP decided to seek input from law division in consultation with other stakeholders before moving ahead.

The decision was taken during a meeting chaired by Minister for Finance and Revenue Hafeez Sheikh. Privatization Division presented a summary regarding privatisation status of National Power Parks Management Company Limited (NPPMCL) before CCoP. Different scenarios were presented before the CCoP for changing the capital structure – debt-equity ratio of NPPMCL that operates the plants.

After detailed discussion, the finance minister directed the Privatization Commission to accelerate the privatization/ management contracts of all entities and implementation plan may be presented before the CCoP within a week to proceed further. The chair also directed the sub-committee constituted for the NPPMCL to finalise its recommendations and place before the CCoP accordingly.

The Economic Coordination Committee of the cabinet in November 2019 directed the Privatisation Commission to expedite the privatisation of NPPMCL. Later in the same month, the commission floated an invitation seeking expression of interest from interested parties to acquire up to 100 percent of the equity stake with management control in either NPPMCL (in case both power plants will be acquired by the same investor) or two companies each of which will own one of the power plants (in case different investors will acquire the power plants).

The last date for submission of expression of interest was December. As per the ministry of privatisation in July’20 NPPMCL had unprecedented interest and 12 out of the total 23 parties were pre-qualified for bidding, which was previously scheduled to take place in mid-April’20 this year, but due to pandemic and international travel advisory restrictions, the timeline was modified accordingly.

The high profile local and international potential investors including Qatar Investment Authority, EDRA, GPSC, Jera and KAPCO, Atlas Power, Asma Capital, Nebras Power among others showed interest in the said transaction. Owing to onslaught of pandemic, no final timeline for formal privatization has yet been disclosed by the government.

The finance division tabled a summary regarding shareholding structure of Pakistan Credit Guarantee Company. The ECC had already endorsed the proposal dated 24th December 2020 regarding change in the shareholding structure of the PCGC. The subject matter was placed before CCoP for further deliberation prior to ratification by the Cabinet.

After due deliberation, the chair directed the law division to provide its input in consultation with finance, economic affairs division and State Bank of Pakistan for consideration in the next meeting.

Earlier, the ECC had approved the sale of majority shareholding of the state-owned Pakistan Credit Guarantee Company to the UK-funded entity — Karandaaz — by converting billions of rupees worth of unspent grants into equity.

The sale was approved despite the fact that the ministry of finance had initially raised key questions in writing at the initial stage. Out of grant money of £50 million, the unspent funds stood at Rs3.5 billion lying with the State Bank of Pakistan. The funds were invested into T-bills so the principal and mark-up amount increased to Rs6.5 billion in the last 12 years from 2008 through 2020. It is not yet known how the government moves ahead but many eyebrows have been raised over this deal.