ISLAMABAD: Ministry of Finance (MoF) has directed the Ministry of Energy to expedite approval of privatisation of Guddu Power Plant and Nadipur Power Plant from the Cabinet Committee on Energy (CCoE).
In this regard, Finance Ministry has written letters to Petroleum Division, Power Division and Privatisation Commission, in which it has been conveyed that the Federal Minister for Finance and Revenue has desired to place the matter regarding privatisation of Guddu and Nadipur Power Plants before CCoP in its next meeting. However, Privatisation Commission maintains that the case is first to be presented by Petroleum and Power Divisions before CCoE for a decision.
Finance Ministry has requested Ministry of Energy (Petroleum and Power Divisions) to expedite the matter in the light of CCoP decision regarding equity transfer to PSO against its receivables and present the issue before CCOE. Thereafter, Privatisation Commission will submit the case to CCoP for a decision.
Last month, Federal Cabinet approved financial evaluation of 425 MW Nadipur Power Plant (NPP) (with potential of 525 MW) and 747 MW Guddu Power Plant (GPP) for subsequent privatisation.
On December 31, 2021, Privatisation Division briefed the Cabinet Committee on Privatisation about its plans with respect to both the combined cycle power plants and sought to issue necessary direction to Ministry of Energy for obtaining decision of CCoE as already decided by CCoP.
Privatisation Division also proposed that in the event of moving forward with privatisation of GPP and NPB, the concerned Ministries may also be directed to take necessary actions to resolve the problems hampering privatisation of these power plants.
While approving the proposal, CCoP directed the Privatisation Division to continue the process of financial evaluation of Nadipur and Guddu power plants along with their assets.
In the meanwhile, the Petroleum Division in consultation with the Power Division and Finance Division shall examine the matter of equity transfer to PSO against its receivables and present the issue before CCoE in the first place.
However, when the CCoP decision was placed before the Federal Cabinet on January 11, 2022 for ratification, Cabinet Secretary, Sardar Ahmad Nawaz Sukhera, suggested that in the case titled ‘Privatisation of Guddu Power Plant & Nadipur Power Plant’, the option of equity transfer to PSO against its receivables may not constitute ‘privatisation’, as it would be a transaction between government entities, and the legal position may be rechecked from the ‘modes of privatisation’ given in the Privatisation Commission Ordinance, 2000. It was also highlighted that in such a case the evaluation should be done by a third party.
The Minister for Energy, Hammad Azhar and Minister for Finance, Shaukat Tarin stressed that the privatisation process should not be stalled and the receivables of PSO could be settled from the proceeds of privatising the two power plants. The decision of CCoP to present the issue to CCoE should; however, be ratified.
After brief discussion, the Cabinet also ratified the decision of CCoP in the case titled ‘Privatisation of Guddu Power Plant & Nadipur Power Plant’ with the stipulation that the financial evaluation of Nadipur and Guddu power plants be carried out subsequent to CCoE’s decision.
Copyright Business Recorder, 2022