Pakistan State Oil (PSO) is likely to get Guddu and Nandipur power plants’ management control after getting shares under the equity swap arrangement, reported a local news website.
Special Assistant to Prime Minister on Petroleum, Nadeem Babar, during a recent meeting, informed that PSO’s receivables are stuck in Genco-3. The receivables for PSO had touched Rs. 318.9 billion. Therefore, it may be a viable option to give PSO stakes in the aforementioned power plants.
ALSO READ
PSO Floats Tenders To Ensure Optimal Fuel Availability in 2021
PSO had proposed that the government transfers its shares to Mari Petroleum Company Limited (MPCL), Oil & Gas Development Company Limited (OGDCL), and Pakistan Petroleum Limited (PPL) against receivables of PSO (an equity swap arrangement).
The government is currently working on an inter-company equity swap model to clear the circular debt that has soared to Rs. 1.6 trillion.
The proposed arrangement will help clear the circular debt of Rs. 100 billion. Moreover, the transfer of these shares will not require the government to arrange any funds while keeping control of these strategic assets through PSO.
During the meeting, it was also suggested that the Privatization Commission might be involved in the process to intimate financial due diligence through an external expert to determine the swap price for Guddu and Nandipur power plants.
PSO will have to do proper financial due diligence after attaining Economic Coordination Committee’s (ECC) approval for equity swap in Guddu and Nandipur. It also needs to be done through external experts.
ALSO READ
New PARCO Refinery to Enable Local Production of Petroleum Products
In a letter sent to Secretary Petroleum Ministry of Energy (Petroleum Division), Asad Hayauddin, PSO management informed that its circular debt had reached an alarming level, which has significantly escalated the financing cost of the company, with last year’s interest payments recorded at Rs. 15 billion.
PSO said that it appreciated the ministry’s support towards resolving this issue since this debt had adversely affected profitability and hindered infrastructural development investments of the company.
