ISLAMABAD: JP Morgan, one of the world’s top investment banks, advised the Privatisation Commission on Monday that the Qatar Participation Authority (QIA) consortium is a strong competitor for investment in the RLNG power projects of Haveli Bahadur Shah and Balloki.
The RLNG-based combined cycle H9 technology power stations at Haveli Bahadur Shah in Jhang district and Balloki in Kasur are owned and operated by the National Power Parks Management Company (NPPMCL), a state-owned corporation.
However, during their meeting with Minister for Privatisation Mohammadmian Soomro, senior JP Morgan representatives inquired about the current volume of circular debt, payments due to independent power plants, and NPPMCL’s massive receivables, all of which could have a significant negative impact on potential investment in the sector.
Asif Raza, Managing Director, Global Corporate Bank CEEMEA, Imran Zaidi, Managing Director, Global Corporate Bank covering the Middle East and North Africa (MENA), and Amin M. Khawaja, Chief Executive Officer Pakistan are among JP Morgan’s senior representatives.
Mr Soomro informed the JP Morgan delegation that the issues of circular debt and receivables of NPP have been taken up with the ministries of power division and finance. Local banks and development financial institutions were considering providing the significant portion of debt for NPPMCL.
The meeting was held in the backdrop of the privatisation of two RLNG Power plants of Haveli BahaderShah and Balloki. The government has initiated the process of implementing economic reforms in the power sector and as a part of the reforms the Ministry of Privatisation is pursuing privatisation of state-owned entities to promote and enhance capital formation outside government budget and to improve efficiency through competition, accountability, managerial autonomy and profit incentives.
While the process of privatisation of two RLNG plants was slowed down due to the Covid-19 pandemic, considerable progress had been made as 12 parties were pre-qualified in April 2020. The process restarted after Covid-19 restrictions were relaxed and currently the ministry is pursuing debt-refinancing and recapitalisation for NPPMCL with local banks.
The delegation was informed that the Ministry of Privatisation has resolved various key issues to make this transaction viable, and these include approval of the Council of Common Interest (CCI) for inclusion of power plants in the privatisation list, Ecnec approval for project costing, transfer of the land for NPPMCL from Punjab government, approval of the COD tariff determination, amendments in the canal and drainage rules approved from Punjab government, conversion of land use of both power plants approved by local government, water usage agreements with Punjab government and also drafted the scheme for de-merger of NPPMCL into two separate companies prepared for submission to the Securities and Exchange Commission of Pakistan (SECP).
Mr Soomro informed the delegation that owing to the positive response from the investors, the transaction will hopefully be completed during the current fiscal year (2021-22). The representatives from JP Morgan said that for the wider interest of the country the investment bank desires to bring investment in power sector.