ISLAMABAD: The Privatisation Commission has reportedly expressed reservations against the Power Division for not sharing requisite information about Nandipur and Guddu Power Plants (NPP&GPP) sought by the Financial Advisors, well-informed sources told Business Recorder.

Sharing the details, sources said the Privatisation Commission, in a letter to Power Division referred to the decision titled “entities in pipeline for privatisation Nandipur Power Plant and Guddu Power Plant,” saying that these plants are on Active Privatisation List (APL) since long but with no substantial progress.

Two power plants: PD shares with PC issues hindering sell-off process

According to the PC, due diligence conducted by Financial Advisor indicated the following key issues associated with these power plants that require resolution for taking the privatisation process further: (i)removal of charge, created on assets of the power plants, for Sukuk Bond issued by GoP; (ii) separate corporate entities to be established each for GPP & NPP, carving out from CPGCL- (GENCO-II) and NPGCL (GENCO-III ) respectively; (iii) separate Power Purchase Agreements (PPAs) to be entered into for GPP and NPP, with CPPA-G;(iv) Implementation Agreement (IA) or GoP guarantee, similar lo GoP’s with IPPS, for both GPP & NPP;(v) separate gas allocation, specific for these power plants; (vi) separate GSPA (post gas allocation); (vii)creation of separate Gas headers; (viii)separate power generation licence to be applied to Nepra, carving out from consolidated licencee of NPCCL and CPGCL; and (ix) transfer of land and assets in the name of new NPP and GPP Companies.

The Cabinet Committee on Privatisation (CCoP) on a summary submitted by Ministry of Privatisation on February 07, 2024 directed the Power Division to submit timelines for each of the issues hindering the privatisation process within three days to Privatisation Division.

However, no such timelines were shared with Privatisation Division till date. A summary regarding five-year privatisation programme 2024-29 was placed before the CCoP in its meeting held on May 10, 2024. NPP &GPP were recommended for inclusion in the program with the condition that Power Division to carve out efficient plants (Combined Cycle) for privatisation and that CCoP’s earlier decisions are complied with.

During discussion, it was pointed out that GENCOs should not be offered to the market in their entirety and only the efficient plants needed to be carved out and offered to investors. The obsolete plants should be disposed of by the Ministry/Division separately so that the price is not reduced due to these inefficient/obsolete plants.

Regarding DISCOs, it was noted that some DISCOs were being offered for outright privatisation and others were being offered for Long-Term Concession Models while retaining two (QESCO and TESCO) for peculiar circumstances. It was also emphasized that prior conditions, tariff guidelines and determination, cleaning up of balance sheets, decision on Tariff Differential Subsidy (TDS), etc., as discussed during Committee meetings, would be critical to kick-off the privatisation of DISCOs and hence Power Division was required to address these issues of Discos on priority.

Copyright Business Recorder, 2024

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