ISLAMABAD: The government’s second-phase auction for three dysfunctional or closed thermal power plants received a lukewarm response, with only one party submitting a bid — for the Jamshoro Thermal Power Plant (JTPP). No bids were received for the Muzaffargarh and Faisalabad power plants.
The Genco Holding Power Company Limited (GHCL) on Monday conducted open bidding for the disposal of three redundant, old, and defunct power plants, offered on an “as-is, where-is” basis. These plants have a combined generation capacity of 2,362 MW and a reserve price of Rs 26.625 billion.
The auction included the 880 MW Jamshoro Thermal Power Station, the 1,350 MW Muzaffargarh Thermal Power Station, and the 132 MW Steam Power Station in Faisalabad.
Second phase of auction for defunct power plants today
Prospective bidders had raised concerns regarding the applicability of income and sales taxes, as well as the exemption of sales tax on metal scrap under prevailing tax laws.
In the first phase of the disposal process, the following GENCO-operated power plants were offered through International Competitive Bidding (ICB). The process concluded successfully, with all winning bids exceeding the respective reserve prices: (i) NGPS(D) Multan (260 MW); (ii) TPS Multan Cant (20 MW); (iii) Gas Thermal Power Station Faisalabad (247 MW); (iv) GTPS Shahdara(85 MW); (v) TPS Sukkur (50 MW); (vi) GTPS Kotri(174 MW); and (vii) TPS Lakhra (150 MW) with a total reserve price of Rs 8,075,599,745 but the highest quoted price was Rs 9,053,933, 333.
The second phase involves the disposal of power plants with a cumulative installed capacity of 2,362 MW, located at the following sites: (i) TPS Jamshoro -880 MW with a reserve price of Rs 9.974 billion; and (ii) TPS Muzaffargarh 1350 MW with reserve price of Rs 15.050 billion and Steal Power Station (SPT), Faisalabad 132 MW with a total reserve price of Rs 1.601 billion.
In line with the Government of Pakistan’s reform agenda and pursuant to the decisions of the Economic Coordination Committee (ECC) of the Cabinet, along with subsequent directives of the Prime Minister and the Ministry of Energy (Power Division), the process for the closure and disposal of obsolete, defunct, and redundant thermal power plants operated by public sector power generation companies (GENCOs) has been formally initiated.
The GENCOs, functioning under the administrative control of the Power Division, are responsible for managing these thermal power assets located across Punjab, Sindh, and Balochistan. Many of these power plants were installed in the 1970s, 1980s, and 1990s, and have since exceeded their operational lifespan.
The four GENCOs involved are: (i) Jamshoro Power Generation Company Ltd. (GENCO-I) – Jamshoro; (ii) Central Power Generation Company Ltd. (GENCO-II) – Guddu;(iii) Northern Power Generation Company Ltd. (GENCO-III) – Muzaffargarh; and (iv) Lakhra Power Generation Company Ltd. (GENCO-IV) – Lakhra.
NPGCL clarified that the assets being sold are redundant and defunct plants offered on an “as-is, where-is” basis and do not fall under the category of scrap. Therefore, sales tax is to be applied at the standard rate of 18% for registered firms, with an additional 4% for unregistered firms.
Furthermore, under current tax laws, a 10% advance income tax will be collected from bidders with active taxpayer status, while non-active taxpayers will be charged double. These tax rates are subject to future revisions as per amendments to the tax laws.
Bidders also requested a reduction in the performance security requirement from 10% to 5% of the total contract price. However, NPGCL management insisted that bidders must adhere to the provisions outlined in the issued bidding documents.
Some participants felt that the reserve prices were too high and asked for details regarding how the prices were determined, including quantities and rates of valuable metals such as copper, aluminum, and carbon steel. The NPGCL responded that the reserve prices had been determined by an independent valuator approved by the State Bank of Pakistan.
However, valuation details could not be disclosed, as the disposal is being conducted on an “as-is, where-is” basis. Bidders were encouraged to carry out their own assessments before submitting bids.
Further, bidders proposed that dismantling should be allowed upon payment of the first 30% installment, but removal of materials from the site should be restricted. They also suggested that due to the large sums involved, staggered payments should be facilitated. Specifically, they requested that the reserve prices of key equipment—such as turbines, generators, transformers, motors, and cables—be itemized in the price schedule.
The remaining material could be categorized as scrap, with a per-kilogram reserve price listed. This would allow bidders to make advance payments for specific equipment and release materials accordingly, enabling phased payments and material removal, while ensuring full payment is secured in a timely manner.
“We will assess why no bids were submitted for Muzaffargarh and Faisalabad,” said the CEO of NPGCL.
Copyright Business Recorder, 2025
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