Valuation exercise for power plants: CCoP allows reengagement of FA

ISLAMABAD: The Cabinet Committee on Privatisation (CCoP) has allowed the reengagement of a financial advisor for the valuation exercise for the sale of two power plants parked under the National Power Parks Management Company Limited (NPPMCL).

The meeting of the CCoP presided over by Finance Minister Miftah Ismail Wednesday was put up a summary by the Privatisation Commission for the reengagement of a financial advisor and stated that the Financial Advisory Services Agreement (FASA) for the privatisation of the NPPMCL was signed between PC and M/s Credit Suisse, Singapore and expired on April 29, 2022.

The meeting was informed about the background that during the prime minister’s visit to Qatar dated August 15, 2022, the Privatisation Commission was directed that the valuation exercise for the sale of two power plants will be undertaken and the Privatisation Commission will re-engage Credit Suisse for the exercise.

The meeting was informed that with regard to re-engaging the FA through extension in FASA, the PC on April 26 forwarded a draft addendum to M/s Credit Suisse for extension of services for another period of 15 months on the same terms and conditions laid down in FASA dated April 30, 2019.

However, on the PC’s request, the FAC conveyed dated May 25, 2022, that they are open to considering an extension in FASA for another 15 months, subject to completion of the following key points prior to formalising any such extension;(a) payment of all outstanding amounts including milestone-based fee and out of pocket expenses;(b) financial close of the debt re-capitalization process by the NPPMCL;(c) finalization and execution of Security Package (GSA, PPA & IA); and;(d) resolution of other issues affecting transaction i.e. payment of receivables etc.

The meeting was further informed that para 4 (c) and (d) ante highlight the main reasons that have halted the NPPMCL transaction process and pre-qualified potential bidders would like to have complete clarity on the sectoral and transaction issues relating to the energy chain, which have a significant impact on the NPPMCL.

The CCoP on June 24, 2022, decided and approved the constitution of a Sub-Committee under the chairmanship of the Minister for Power along with Chairman PC, Secretary Power, Secretary Petroleum, Secretary Privatization, Additional Secretary Finance (IGF) Finance Division, and CEO NPPMCL as members for early resolution of major bottlenecks/issues in relation to the NPPMCL transaction.

In line with the CCoP’s decision, two meetings of the committee were held under the Minister for Power in the Power Division on July 27, 2022, and August 12, 2022. The committee has meticulously examined the transaction-related bottlenecks and it is expected that inter-ministerial issues will be resolved by the respective Divisions/entities for the successful closure of the transaction.

The meeting was informed that the NPPMCL is a major and complex transaction and the financial adviser will assist the PC in relation to financial restructuring, divestment options, valuation, reference price, process, transaction documents, post bid evaluation and closure of the transaction.

The government is committed to inviting the much-needed private sector investment and expertise in the power sector. Based on the efforts of the federal government, international investors are now looking for investment opportunities in Pakistan.

Copyright Business Recorder, 2022