ISLAMABAD: Federal Minister for Privatisation Mohammad Mian Soomro on Thursday urged the financial sector to participate as lenders in order to successfully complete the privatisation process in the country.
Soomro and Special Assistant to Prime Minister on Petroleum Division Nadeem Babar met with the heads of international and local banks in Karachi, said a press release issued by the Ministry of Privatisation.
The meeting was attended by members of the Financial Advisory Consortium (FAC), State Bank of Pakistan (SBP) deputy governor, presidents and group chiefs of National Bank of Pakistan, MCB Bank, UBL, ABL, Habib Metropolitan, Bank Al Habib, Bank Alflah, Bank of Punjab, HBL, Meezan Bank and Faysal Bank.
In the meeting debt arrangement for two Re-gasified Liquefied Natural Gas (RLNG) power plants of National Power Parks Management Company Limited (NPPMCL) came under discussion.
According to a press release NPPMCL was formed with an objective to reduce the electricity demand and supply gap in the country.
The government is now considering divesting up to 100 per cent of its shareholding in NPPMCL to a potential investor, along with management control.
As part of the privatisation process, the potential bidders will be required to refinance the government’s and Pakistan Development Fund Limited’s (PDFL) funding and NPPMCL’s existing commercial debt through foreign or local debt financing.
In order to successfully complete the transaction, potential bidders would need to secure sufficient Pakistani rupee denominated financing which makes the participation of local banks a necessity in order to provide additional confidence to the potential bidders.
The minister for privatisation during his meeting with heads of various local commercial banks urged them to raise the requisite long-term financing within the benchmark approved by National Electric Power Regulatory Authority (NEPRA), and also support the potential bidders obtain NOCs for continuation of working capital lines.
The federal minister urged the commercial banks to facilitate the successful completion of the transaction within the envisaged timeline.
It was further discussed in the meeting that negotiations with older IPPs are in progress to find ways to address cost of generation.
Nadeem Babar said that the government has undertaken a reform process to address the issue of circular debt, however, due to the pandemic the progress has been stalled.