Two Liquified Natural Gas (LNG) power plants, placed on the government’s active privatization list to raise $1.5 billion four years ago, have been quietly removed from the public domain. This was done to sell these assets to Qatar to avoid a sovereign default.
This development occurred two days after the government established a new cabinet committee to sell state assets quickly. This committee will be able to sell the 2460 megawatt (MW) LNG-fired power stations to a foreign buyer.
According to sources, a meeting was called by the Privatisation Commission Board (PCB), on Thursday to take down the plants from the privatization program. Abid Hussain, the Minister for Privatisation and the Chairman of the board, was absent from the city and only attended the meeting virtually.Â
Normally, the PCB issues press statements after board meetings. However, this time, there was no statement, apparently in order to keep the matter a secret.
The secretary of privatization and the privatization minister did not respond to a request for comment. According to sources, the board recommended that power plants be removed from the privatization list and sent to the Cabinet Committee on Privatization.
These were the two most valuable assets on the privatization list. Following this development, the existence of a Privatisation Minister or a Privatisation Commission is now in doubt.
In an attempt to raise approximately $1.5 billion for funding the budget, the previous government of the PTI had placed both power plants on the active list of privatizations. It has not been able to address the problems or raise Rs. 103 billion in new debt over the past four years. The government plans to retire its equity this way.Â
These plants were funded by government funds during PML-N’s rule. They are now owned by the National Power Park Management Company Private Limited (NPPMCL) instead of the 70:30 debt-to-equity ratio allowed in NEPRA’s tariff for NPPMCL’s power plants.
Sources claimed that the board was informed by the PM’s office that they wanted the plants to be removed from the list under the Intergovernmental Commercial Transaction Act of 2020.
Instead of going through the lengthy and tedious process required by the 2000 Privatisation Ordinance, the 2022 law allows for direct sales to foreign countries of assets.
However, the long process also ensures transparency. Direct sale arrangements may raise questions about transparency, since the government will make the final decision, without any competition.
One view is that Qatar will only sell 30% of its equity. The price discovery will be based on known factors that reduce discretion.
