As knowledgeable sources speaking to the Business Recorder reported, the Power Division is allegedly not disclosing the timelines for the privatization of two significant thermal power plants, Nandipur Power Plant and Guddu Power Plant (NPP & GPP). This delay could have significant implications for the energy sector, potentially affecting the supply and cost of electricity.
According to an Office Memorandum (OM) titled “Entities in the pipeline for privatization – Nandipur Power Plant and Guddu Power Plant” from the Ministry of Privatization, the ministry has stated that it is still waiting for the required information, despite sending letters on May 17, 2024, and subsequent reminders on June 28, 2024, and July 5, 2024. The urgency and importance of this information cannot be overstated.
Sources claim that the Privatization Ministry insists that Nandipur and Guddu Power Plants have been on the Active Privatization List (APL) for a long time, but there has been no significant progress. The Financial Advisor’s due diligence has revealed several key issues related to these power plants that need resolution before the privatization process can move forward. These include the removal of a charge created on the assets of the power plants for a Sukuk Bond issued by the Government of Pakistan, the establishment of separate corporate entities for GPP & NPP, separate Power Purchase Agreements (PPAs) with CPPA-G for GPP and NPP, an Implementation Agreement (IA) or Government of Pakistan guarantee similar to that with Independent Power Producers (IPPs) for both GPP and NPP, separate gas allocation specific to these power plants, a separate Gas Sales Purchase Agreement (GSPA) post gas allocation, the creation of separate Gas headers, and the transfer of land and assets in the name of the new NPP and GPP Companies.
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On February 07, 2024, the Cabinet Committee on Privatization (CCoP), a high-level government body responsible for overseeing and approving privatization decisions, directed the Power Division to provide timelines for the issues hindering the privatization process to the Privatization Division within three days. However, no such timelines have been shared to date.
The Ministry of Privatization also urged the Power Division to prioritize sharing information related to the final phasing of 9 DISCOs (especially the 3 DISCOs proposed for concession) and to complete prior actions as soon as possible for the implementation of the privatization program.
The Privatization Division argued that the Power Division needs to complete prior conditions for DISCOs as soon as possible, enabling the Privatization Commission to begin the privatization process. They stated that the process of hiring Financial Advisors for DISCOs will only commence once the Power Division resolves the associated issues and confirms the readiness of DISCOs for privatization.
