FA Credit Suisse to be reengaged
MUSHTAQ GHUMMAN
ISLAMABAD: The government has decided to reengage Financial Advisor M/s Credit Suisse, Singapore for privatisation of two RLNG-fired power plants of National Power Parks Management Company Limited (NPPMCL), official sources told Business Recorder.
Sharing the details, sources said, on August 15, 2022, Prime Minister’s Office, wrote a letter regarding review on preparations for the visit of the Prime Minister to Qatar, wherein the following direction was communicated to Privatisation Commission (PC) “valuation exercise for the sale of two power plants will be undertaken and Privatisation Commission will re-engage Credit Suisse for this exercise.”
In this regard, PC apprised that the Financial Advisory Services Agreement (FASA) for the privatisation of NPPMCL was signed between PC and M/s Credit Suisse, Singapore on April 30, 2019 which expired on October 30, 2020. Subsequently, FASA was extended for another period of 18 months which expired on April 29, 2022.
As far as reengaging the FA through extension in FASA is concerned, PC on April 26, 2022 forwarded the draft addendum to M/s Credit Suisse for extension of another period of 15 months on the same terms & conditions laid down in FASA dated April 30, 2019. On the PC’s request, the FA conveyed in a letter of May 25, 2022 that they are open to considering extension in FASA for another 15 months, subject to completion of the following key points prior to formalizing any such extension: (i) payment of all outstanding amounts including milestone-based fee and out of pocket expenses; (ii) financial close of the debt recapitalization process by NPPMCL; (iii) finalization and execution of Security Package (GSA, PPA & IA); and(iv) resolution of other issues affecting transaction, ie, payment of receivables, etc.
According to PC, finalization and execution of security package, (GSA, PPA, IA) and resolution of other issues affecting transaction including payment of receivables etc. highlight the main reasons that have halted the NPPMCL transaction process, adding that the pre-qualified potential bidders would like to have complete clarity on the sectoral and transaction issues relating to the energy chain, which have significant impact on NPPMCL.
The CCoP on June 24, 2022 decided and approved the constitution of a Sub Committee under the chairmanship of Minister for Power along with Chairman PC, Secretary Power, Secretary Petroleum, Secretary Privatisation, Additional Secretary Finance (IGF) FinanceDivision and CEO NPPMCL as Members for early resolution of major bottlenecks/issues in relation to NPPMCL transaction.
The sources said in line with the CCoP decision, two meetings of the Committee were held under the Minister for Power in the Power Division on July 27, 2022 and August 12, 2022 which meticulously examined the transaction related bottlenecks.
The sources maintained that it is expected that inter-ministerial issues will be resolved by the respective Divisions/ Entities for the successful closure of the transaction. NPPMCL is a major and complex transaction. Financial Advisor will assist the PC in relation to financial restructuring, divestment options, valuation, reference price, bidding process, transaction documents, post bid evaluation and closure of the transaction.
Privatisation Commission maintains that government is committed to invite the much-needed private sector investment and expertise in power sector. Based on the efforts by the federal government, international investors are now looking for investment opportunities in Pakistan.
