Sell-off delayed on Covid-19
WASIM IQBAL & ZAHEER ABBASI
ISLAMABAD: The government has delayed the privatization of two RLNG power plants from the current fiscal year (2019-20) to the first quarter of next fiscal year (considered overly optimistic target) as ongoing COVID-19 has brought commercial activities to a standstill as well as due to concern of prospective buyers with ongoing renegotiations with Independent Power Producers (IPPs).
Sources said that Cabinet Committee on Privatization (CCoP, has been informed that privatization process of two RLNG power plants, Haveli Bahadur Shah and Balloki Power plants, would face a setback due to renegotiation of contracts with Independent Power Producers (IPPs).
Sources further maintained that interested bidders for the privatization of RLNG power plants have shown their concern with regard to government intent to renegotiate Power Purchase Agreements (PPAs) with IPPs. Interested bidders have also sought legal assurance from the government not to revise PPAs in post privatization era,
The government has revised the date for the bidding process of two power plants from last quarter of the current fiscal year to the first quarter of the fiscal year 2020-21 on the request of potential bidders. As many as twelve investors have submitted statements of qualification (SOQs) and have been pre-qualified for bidding process.
Sources said due diligence process is underway and likely to be completed by mid July 2020 and it can not be completed until potential buyers’ complete site visits which are not possible due to global travel restrictions.
The CCoP was also told that financial institutions are also focusing their priorities on addressing COVID-19, therefore, financing for the transaction is hampered and the revival plan of Pakistan Steel Mills (PSM) would also face a delay due to lockdown in the country. The lockdown decision is affecting the work of Financial Advisors as they scheduled to submit the transaction structure by March 31, 2020, the meeting was further told.
The government would be unable to arrange road shows for PSM because of global restriction on gatherings. Pre-bidding conference could also not be held.
Sources said the SME Bank transaction, which was scheduled to be completed in the third quarter of the current fiscal year, has also now been delayed till first quarter of the next fiscal year.
Privatization of Services International Hotel (SIH), Jinnah Convention Centre, House Building Finance Company Limited, Heavy Electrical Complex, First Women Bank and Jinnah Convention has also been postponed with the new unrealistic albeit overly optimistic date of end August 2020.
The government has also postponed the sale of properties identified by the ministries and divisions owing to coronavirus threat while no timeline has been set for the privatization of Nandipur Power plant. The government is therefore not expected to generate the budgeted Rs150 billion from privatization proceeds in the current year. The International Monetary Fund staff report following discussion with Pakistani Authorities for Rapid Financing Instrument (RFI) also noted that no privatization receipts have been projected for current financial year (2019-20) and next financial year (2020-21).
The staff Report has projected no revenue from privatisation in the first three quarters of current financial year or next financial year.