- Legal issues related to proposed second extension of 90 days in validity period of bids of debt recapitalization and refinancing of Rs102bn prove to be hindrance
ISLAMABAD: The privatisation process of two RLNG-fired power plants is said to have hit snags due to legal issues related to the proposed second extension of 90 days in the validity period of bids of debt recapitalization and refinancing of Rs 102 billion, well-informed sources in Privatisation Commission (PC) told Business Recorder.
On September 7, 2022, in a letter, Privatisation Commission said that the request for extension in bids may be obtained from the banks/ consortium subject to completion of legal formalities. In this connection, PC advised National Power Parks Management Company Pvt Ltd (NPPMCL) that Rule No.26 & 27 of Public Procurement Rules, 2004 may also be considered. The Conditions Precedent (CPs) in relation to term sheet need to be addressed in conjunction with relevant stakeholders as early as possible. PC argued that NPPMCL being procuring agency will adhere to all the procurement related laws and procedures at their end. Recently, Qatar renewed its interest in purchase of both RLNG-fired power plants established in Punjab.
On September 12, 2022, NPPMCL, in its response to PC has clarified that it sought opinion from its legal advisors namely M/s Cornelius, Lane and Mufti (CLM) regarding further extension of bid validity period in the light of the relevant Rules of PPRA Rules, 2004 and other procurement related laws as advised by the PC. CLM has provided an explanation of January 25, 2021 issued by Public Procurement Regulatory Authority wherein the Authority has clarified that extension in bid validity period shall be only once.
According to NPPMCL, the opinion sought from CLM states that the debt recapitalization and refinancing facilities from banks/ financial institutions has been sought in the context of the proposed privatisation of NPPMCL and the privatisation process that has been initiated in respect thereof. Therefore, these aspects may also be reviewed in consultation with the Privatisation Commission in light of the Privatisation Commission Ordinance, 2000.
As far as PC’s advice that Conditions Precedent in relation to term sheet need to be addressed in conjunction with relevant stakeholders is concerned, NPPMCL has submitted that the pre-approval CPs, relevant to NPPMCL, have already been discussed and finalized with the banks. However, the following CPs require inter-ministerial resolution for which PC is already in the process of resolution with relevant stakeholders: (i) amendment in Implementation Agreements ;( ii) amendment in Gas Supply Agreements to rationalize gas supply deposits, waiver of 66% take-or-pay commitment in the GSAs and PPAs and increase in Gas Calorific Value (GCV) range from 950- 1000 btu to 950-1150 btu; (iii) receivables from CPPA-G to be brought down to industry norms; (iv) privatisation related clauses including circulation of bidding criteria of privatisation to banks; (v) cross default clauses/ demerger options ;(vi) share pledge and assignment over PDFL loan; and ( vii) rescheduling of PDFL loan. NPPMCL has sought guidance from PC to resolve the issue so that the process of privatization can be expedited.
Copyright Business Recorder, 2022