ISLAMABAD: The Board of Private Power & Infrastructure Board (PPIB) has granted six months extension in the LoI validity period and alteration in shareholding of Trans-Atlantic Energy (Private) Limited (TAEPL), an official told Business Recorder.
TAEPL is developing a 50-MW wind project in Jhimpir, district Thatta, Sindh. The project is placed under Category-II of the CCoE decision and is allowed to proceed ahead, subject to determination of afresh tariff from Nepra.
According to official documents, AEDB Board in its 57th Board meeting allowed an extension of six months in the validity period of the LoI issued to TAEPL subject to submission of extended Bank Guarantee.
Accordingly, as per the decision of the Board, AEDB (now PPIB), in its letter of August 26, 2022 issued an extension in the validity period of the LoI up to January 17, 2023.
During the validity period of the LoI, TAEPL filed Licence Proposed Modification (LPM) of the generation licence and afresh tariff petition to Nepra on October 12, 2022 and January 11, 2023, respectively, for which Nepra issued LPM of the generation licence to TAEPL on June 16, 2023.
However, decision of the Authority on tariff petition filed by TAEPL is still awaited. Accordingly, prior to the LoI expiry, TAEPL, in a letter on January 13, 2023 requested PPIB to grant a further six months extension in the LoI validity.
Further, TAEPL vide letter dated September 16, 2022 submitted an application for change of shareholding and requested PPIB to provide its approval/ No Objection pursuant to clause 8 of the LoI which states that “TAEPL shall not transfer or assign its shareholding in the project company without the prior written approval of PPIB for which approval may be declined by PPIB in its discretion if the proposed transferee’s financial and other relevant credentials are found unsatisfactory.”
In the same letter, TAEPL told PPIB that the existing shareholders of the Company have entered into an Agreement titled the “Share Purchase and Subscription Agreement” with Mustafa Tapal, Adnaan Tapal, Din Corporation (Private) Limited, Din Ventures (Private) Limited, Din Industries Management (Private) Limited, Shaikh Muhammad Pervez, and Ghazala Pervez (collectively referred to as the “Acquirers”) for acquisition of 100% equity stake in TAEPL.
TAEPL further noted that the transaction will be consummated upon receipt of all regulatory approvals. As a consequence of the transaction, TAEPL shall have the following shareholding structure: (i) Mustafa Tapal (25% shareholding); (ii) Adnan Tapal (25% shareholding); (iii) Din Corporation (Private) Limited (13% shareholding); (iv) Din Ventures (Private) Limited (13% shareholding); (v) Din Industries Management (Private) Limited (12% shareholding); (vi) Shaikh Muhammad Pervez (6% shareholding); and (vii) Ghazal Pervez (6% shareholding).
Upon analysis and evaluation of the financial net worth of the Acquirers, premised upon the audited financial statements of last three years in respect of companies and in respect of individual net worth of proposed shareholders duly certified by a Chartered Accountancy Firm provided by TAEPL, it was found that all the individuals and Din Industries Management (Private) Limited qualified as proposed sponsors against their proposed equity contribution.
Further, the individual shareholders of Din Corporation Pvt. Limited, and Din Ventures Pvt. Limited also qualified as per their respective shareholding in the Companies as well as, against their proposed equity contribution.
Similarly, total net worth of proposed sponsors cumulatively was found more than 1.5 times of equity contribution in the project.
Accordingly, the shareholders of Din Corporation Pvt Limited and Din Ventures Pvt Limited will be locked as initial shareholders/ investors of TAEPL instead of Din Corporation Pvt. Limited and Din Ventures Pvt. Limited in form of the Company.
Moreover, it was noted that the proposed Sponsors/ Acquirers have already developed four wind projects making a cumulative capacity of 180MW in district Thatta, Sindh. All the four wind projects are commissioned and supplying electricity to the national grid.
The request of TAEPL for shareholding transfer was also reviewed by DG (Law) after PPIB opined that the No Objection/ approval may be issued to TAEPL.
Accordingly, the requests of TAEPL for extension in LoI validity period and change in shareholding was placed before the AEDB Board in its 60th Board meeting wherein the AEDB Board constituted a committee to carry out fact finding and ascertain the following: (i) whether the delays in the implementation of the project are attributable to the project company or the government entities; (ii) if there is a delay attributable to the project company, is the delay sufficient to justify a cancellation; and (iii) whether the policy/ LoI allows 100% transfer of shareholding.
Further, regarding the extension in validity period of the LoI issued to TAEPL, the Board decided that it will be decided upon based on the recommendation of the committee and subsequent decision of the Board with regards to approval on change of shareholding of TAEPL.
The erstwhile AEDB Board, in its 62nd Board meeting, was informed that the Committee has carried out the fact finding in the matter and has made the following recommendations: (i) the delay in implementation of the Project was due to expiry of RE Policy, 2006 and required fresh approvals from public sector entities under CCoE decision April, 2019.
The delays were not fully in control of the sponsor. Hence, cancellation of LoI is not supported; (ii) 100% transfer of shareholding/ equity stake would set a precedent for sponsors to get award of a project and later walk out of it; (iii) the management may be advised to prepare a comparative analysis of the financial strength/ experience of existing and proposed shareholders. AEDB Board may consider transfer of 49% shares in the Project provided that the proposed shareholders have equal or better credentials than the existing shareholders; (iv) an earlier precedent is available where AEDB Board, in its 24th meeting allowed transfer of major shareholding of M/s. Dawood Power (Pvt.) Ltd. to M/s. Hydro China International for 50-MW wind power project at Gharo at post LoS stage (93.33% shares of M/s. Hydro China International to M/s. Dawood Power Pvt. Ltd.).
It was requested that on observations, available precedent and legal opinion, AEDB Board may consider 100% or 49% transfer of shareholding of M/s. Trans-Atlantic Energy Pvt. Ltd. for 50-MW wind power project.
The Member from Planning Commission opined that the RE Policy 2006 under section 8.9.3, stipulates that the main sponsor together with other initial project shareholders, must hold 51% of the project equity for a period up to the project’s Commercial Operations Date (COD). It is not clear as to when the lock-in period starts and whether AEDB Board can approve such change in shareholding. In view of the said observation, the Board directed PPIB to take opinion from Law Division in the matter and place before the Board.
Pursuant to the decision of the Board, a legal opinion in the matter was accordingly sought from the Law Division wherein the latter opined “there is no restriction in the ARE Policy 2006 on the transfer of LoI. However, any change in the shareholding structure will require written consent of the AEDB which may approve or disapprove in its discretion after examining the financial and other relevant credential of the proposed transferee. It is; therefore, suggested that the AEDB may consider to grant no objection/ approval to the proposed shareholding of the M/s Trans-Atlantic Energy after examining the financial and other relevant factors/ credentials as per their policy.”
Foregoing in view and considering the clearance received from the Law Division and DG (Law), as well as, the financial net worth and technical expertise of the proposed sponsors/ Acquirers, PPIB proposed that the Board may allow the request of TAEPL for a change in shareholding. Further, the Board may also allow an extension of six months in the LoI validity period from the date of receipt of extended BG from TAEPL.
After discussion, the Board in its meeting held on February 29, 2024 approved both the proposals of PPIB. Recently, a body of SIFC decided that Nepra will give tariff determination by end of first week of April 2024, whereas, approval of change in shareholding was to be granted by the PPIB Board within February 2024.
Copyright Business Recorder, 2024
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