The Privatization Commission Board (PCB), headed by Minister of Privatization, Mohammad Mian Soomro, has pre-qualified 12 firms to bid for 2 multi-billion dollar LNG-fired power plants.
The National Power Parks Management Company Limited (NPPMCL) owns both power plants located at Haveli Bahadur Shah and Balloki. The power plants have a total capacity of 2,453 MW. The PCB is hoping to raise Rs. 300 billion in non-tax revenue through the sale of power plants.
According to details, the PCB has pre-qualified all 12 parties that had submitted statements of qualification to acquire the 2 power plants. It includes renowned global firms from Malaysia, Japan, Thailand, and the UK.
Following the pre-qualified phase, all of the 12 firms will start the due diligence process, said Privatization Secretary, Rizwan Malik.
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Moreover, the PCB has granted approval to hire financial advisers to sell 10% shares of Pakistan Petroleum Limited (PPL) and 7% stakes of Oil and Gas Development Company Limited (OGDCL). PCB is confident to raise Rs.400 billion by selling stakes of the country’s two blue-chip enterprises.
The PCB will also sell 27 unprofitable government-owned properties through an open auction. The total combined price of these properties is estimated to be Rs. 6.7 billion.
All the revenue raised through the sale of shares of petroleum corporations, capital market transaction and privatization of power plants will be used to bridge the budget deficit.
Pakistan Petroleum Limited
Arif Habib-led consortium has been hired by the PCB as financial advisers to sell 10% stakes of PPL. Topline Securities and Credit Suisse make up the winning consortium while Bank Alfalah and CLSA formed the other consortium which was beaten.
The Arif Habib-led consortium will charge a minimum Rs. 590 million to handle the transaction and 1.5% of the transaction value as the success fee. The consortium won despite quoting Rs. 152.5 million higher than its rival.
The share price of PPL is also declining and closed at Rs. 146.87 yesterday.
Oil and Gas Development Company Limited
The PCB hired a consortium led by Arif Habib as financial advisers to sell 7% stakes of OGDCL. Credit Suisse and AKD Securities are the other two firms making up the consortium.
The Arif Habib-led consortium beat the HBL-led consortium of Citibank and Next Capital.
According to reports, Arif Habib consortium will charge Rs. 77.5 million out of pocket expenses and 0.8% of the transaction value as the success fee that has been notionally determined at Rs. 358.9 million. The total fee that the Credit Suisse consortium offered to charge was Rs. 436.3 million.
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The HBL-led consortium sought to charge Rs. 116 million as out of pocket expenses and 1.5% of the transaction value as a success fee. It had offered Rs. 788.7 million as the total fee to handle the transaction.
OGDCL’s share price is continuously declining and closed at Rs. 140.07 yesterday. During the past 8 years, it is the third instance where the federal government is looking to sell the shares of OGDCL at either the Pakistan Stock Exchange (PSX) or in the global capital markets.
27 Properties
The PCB has approved to sell 27 unproductive state-owned properties worth Rs. 6.7 billion through an open auction. These properties are:
- 1 property of Republic Motors Limited worth Rs. 5.03 billion
- 17 properties of the Earthquake Reconstruction and Rehabilitation Authority (ERRA) worth Rs. 225.5 million
- 3 properties of the Civil Aviation Authority (CAA) worth Rs. 213 million
- 3 properties of the Ministry of Water Resources worth Rs. 275 million
- 2 properties of the Federal Board of Revenue (FBR) worth Rs. 640 million
- 1 property of Trading Corporation of Pakistan worth Rs. 262.5 million
