The Cabinet Committee on Privatisation (CCoP) which is scheduled to meet on Thursday (today) with Prime Minister Syed Yousuf Raza Gilani in the chair after a prolonged interval, will consider Initial Public Offering (IPO) of Islamabad Electric Supply Company (Iesco), well-informed sources told Business Recorder.
In 1992, the GoP had approved a strategic plan for restructuring power sector with the objective of enhancing capital formation, improve efficiency through competition, accountability, managerial autonomy and profit incentives. Sources said President and Prime Minister jointly convened a briefing of the Ministry of Privatisation regarding the future privatisation plans at Aiwan-e-Sadr on November 22, 2010.
The Privatisation Board, in its recent meeting presided over by Privatisation Minister Waqar Ahmad Khan, was successful only in distribution of shares of public sector entities amongst the workers, listing of Iesco in the stock exchanges with management outsourcing to be undertaken as a pilot project within the current calendar year. The Ministry of Privatisation was tasked to prepare a plan and place it before the competent authority for finalisation/approval. The experience will be repeated with respect to other Discos on a fast track basis.
It was proposed to the Board that the process of the IPO and management outsourcing for Iesco may be initiated by appointing qualified Financial Advisor/Lead Manager for optimum transaction structure and value to the GoP.
The Board maintains that listing of Iesco will bring significant value to the transaction due to potential of strong capital market distribution capability.
The benchmark of KSE index has shown a strong recovery from its low of 4,815 in January and is currently trading at the 11,000 level. The company is financially sound and is in profit. The line losses are about 9.8 percent with the value of the share at Rs 38.91.
The CCoP is also expected to consider privatisation of National Power Construction Corporation Limited (NPCC), a company under the Ministry of Water and Power working in Saudi Arabia and other Middle Eastern countries.
According to official documents, the PC Board was informed that the Privatisation Commission has already taken initiative to privatise the NPCC. Pursuant to the PC Board meeting dated April 23, 2010 Expression of Interests (EoIs) have been invited for appointment of Financial Advisor (FA) for inviting fresh EoIs from local and foreign qualified investors for optimal divestment of GoP shares in NPCC. The Board was informed that the following 7 parties have submitted their EoIs to act as Financial Advisor for NPCC transaction; however, one party namely AKD Securities Limited was not interested in the transaction.
The interested parties are: Anjum Asim Shahid Rahman, AKD Securities Limited, Consortium of [KASB Securities, [Riaz Ahmad & Company, CA], [Barqaab Consulting (Private) Limited] and [Mohsin Tayebaly & Co] UHY Hassan Naeem & Co, Consortium of [Invest Bank''s], [KPMG], [Mohsin Tayebaly & Co] , Consortium of [Khalid Majid Rehman (Chartered Accountants)], [Khan & Piracha (Corporate & Law Experts)], [MEC Consult (Management & Engineering Consultants)] and Consortium of [Habib Bank Limited], (Ernst & Young Ford Rhodes Sidat Hyder.], [Haider Mota & Co] & [Foundation Securities].
The process of hiring of Financial Advisor for NPCC transaction is at an advanced stage. A transaction committee for evaluating the technical and financial proposals was also constituted comprising following four members: (i) former Justice Munir A Sheikh, Member PC Board; (ii) Khurshid Zafar, Member PC Board; (iii) Director General (Power), PC; (iv) Managing Director, NPCC. The Chairman asked Managing Director NPCC''s views on the transaction. He stated that the operational as well as financial viability of NPCC is on right track. The sources further stated that the CCoP will consider various modes of privatisation ie Public Private Partnership and strategic sale.