In order to successfully complete the subject transaction for the privatization process in the country, the Federal Minister Mohammad Mian Soomro asked the financial sector to participate as lenders.
Several banks were asked to participate in the debt arrangement to successfully complete the transaction of two RLNG power plants of National Power Parks Management Company Limited (NPPMCL) by the federal government.
Privatization Minister Muhammad Mian Soomro and Special Assistant to Prime Minister (SAPM) Nadeem Baber met with the heads of local and foreign banks at the State Bank of Pakistan (SBP).
The meeting was attended by board members, members of Financial Advisory Consortium (FAC), deputy governor State Bank, presidents and group chiefs of NBP, MCB, UBL, ABL, Habib Metropolitan, Bank Al Habib, Bank Alfalah, Bank of Punjab, HBL, Meezan Bank and Faysal Bank.
In the meeting, the debt arrangement for two RLNG power plants of National Power Parks Management Company Limited (NPPMCL) was discussed. According to the press release, the 12 IPs were shortlisted for bidding by NPPMCL an objective to reduce the electricity/power demand and supply gap in Pakistan. These banks were asked to participate as lenders to successfully complete the subject transaction.
The government is now considering divesting up to 100 percent of its shareholding in NPPMCL to a potential investor, along with management control.
As part of the privatization process, the potential bidders will be required to refinance the government of Pakistan Development Fund Limited funding and NPPMCL’s existing commercial debt through foreign and/or local debt financing.
During the meeting, it was discussed that in order to successfully complete the transaction, it is critical to ensure that potential bidders are able to secure sufficient Pakistani Rupee denominated financing. Therefore, the participation of local banks is important to provide additional confidence to potential bidders for successfully closing the transaction.
The heads were asked to raise the requisite long-term financing within the benchmark approved by NEPRA and also support potential bidders in obtaining NOCs for the continuation of Working Capital Lines, which is in addition to the long-term financing. The minister said that considering the importance of the Privatisation of these power plants for the government, the Privatisation Commission will appreciate the cooperation of commercial banks/lenders to facilitate a successful transaction within the envisaged timeline.
SAPM and Minister for Power apprised that the government in its reform process to address the issues of circular debt, however, due to the pandemic the process remained stalled for some time.
It was also discussed that negotiation with the older IPPs is in progress to find ways to address the cost of generation. The banks proposed that the government may consider the terms of tariff to encourage bank interest in the subject transaction.