The government of Pakistan is ready to sell its Two Liquified Natural Gas (LNG) power plants for $1.5 billion. The LNG power plant was placed on the government’s active privatization list to raise $1.5 billion four years ago. The plant is planned to get out of the public domain.
The action was to sell these assets to Qatar to avoid a sovereign default. Moreover, the decision was taken two days after the government established a new cabinet committee to sell state assets quickly. The established committee would be able to sell the 2460 megawatt (MW) LNG-fired power stations to a foreign buyer.
According to various sources, a committee was established and the meeting was called by the Privatisation Commission Board (PCB) on Thursday. The objective was to take down the plants from the Privatisation program.
Moreover, Abid Hussain, the Minister for Privatization and the Chairman of the Board, was unable to attend the meeting physically and attended the meeting virtually.
Undoubtedly, the PCB issues press statements after board meetings. Whereas, this time, there was no statement, apparently the aim was to keep the matters confidential.
Though, the Privatization minster and the secretary of privatization did not respond to a request for comment.
As per the sources, the board suggested that power plants has to be removed from the Privatization list and sent to the Cabinet Committee on Privatization.
Indeed, these two were the most valuable assets and resources on the Privatisation list. As per the development, the existence of a Privatization Minister or a Privatization Commission is in doubt.
However, the previous PTI government put both the power plants on active list of privatization. Though, it was in effort to raise nearly $1.5 billion for budget funding.
Over the last four years, it has failed to resolve the issues or raise Rs 103 billion in new debt. This is how government intends to retire it’s equity.
The government funded both the plants by government funds during PML-N’s rule. Both the projects are now in custody of National Power Park Management Company Private Limited (NPPMCPL) instead of 70:30 debt to equity ratio in NEPRA’s tariff for NPPMCPL’s power plants.
According to the sources, the board was already knew by the PM’s office that they wanted the plants to get out of the list under the Intergovernmental Commercial Transaction Act of 2020.
The 2022 law permits direct sales of assets to foreign nations as opposed to the drawn-out and laborious process mandated by the 2000 Privatization Ordinance.
Though, the lengthy process ensures transparency. Direct sale arrangements may raise questions about transparency. Hence, the government will make the final decision without any competition.
However, it is also in a view that Qatar will only sell 30% of it’s equity. The price discovery depends on known factors that reduce discretion.