Plans to transfer control of Nandipur Power Plant, GEPCO to PSO

Finance Division seeks justification from power division for proposing transfer of controlling interest of GEPCO instead of Guddu Power Plant (GPP) 

ISLAMABAD: The government has been planning to transfer assets of Nandipur Power Plant (NPP) to a separate entity which would come under the purview of Pakistan State Oil (PSO), mainly to settle the premier oil company’s claims, Profit learnt on Wednesday.

According to sources in the power division, PSO is likely to acquire the stake of the government in the Nandipur Power Plant (NPP) and Gujranwala Electric Power Company (GEPCO) against the outstanding dues amounting to more than Rs 100 billion. 

Further adding that the government has been planning to carve out assets of NPP into a separate entity, transferring its controlling interest to PSO to settle the company’s claims against NPP and Guddu Power Plant (GPP). 

Similarly, the power division has also proposed transfer of controlling interest of GEPCO to PSO and sought comments from the finance division on the said proposals. 

Upon this, the Finance Division has sought justification from the power division for proposing transfer of controlling interest of Gujranwala Electric Power Company (GEPCO) instead of Guddu Power Plant (GPP), said sources.

They added that PSO’s circular debt receivables can be reduced if the proposed option is implemented in true spirit as the power plants are income generating assets.

According to available copy of an Office Memorandum of Finance Division titled “Partial Settlement of PSO’s Circular Debt Receivables by Transferring Controlling Stake of Government’s Equity in Power Plants”, the proposed transaction structure for NPP suggest that the government shall move the assets into a separate entity after clearing all its active and contingent liabilities.

The proposed transaction is meant to settle PSO’s claims against NPP and Guddu Power Plant (GPP) in lieu of its receivables from afore-referred entities (NPP & GPP). 

The summary however proposes transfer of controlling interests of GEPCO instead of GPP to PSO in deviation from the decision of the federal cabinet, according to the memorandum sent to the Secretary Power Division.

PSO’s key receivable position as of March 7, 2023 disclosed that total receivable of the country’s biggest oil giant stood at Rs 762 billion while it has payables to other companies in the sector in the range of Rs 52.7 billion.  

Reportedly, Cabinet Committee on Privatisation (CCoP) considered the Privatisation Division’s summary regarding “privatisation of Guddu Power Plant (GPP) and NPP” on December 31, 2021 and directed the Privatisation Division to continue the process of financial evaluation of NPP and GPP along with their assets. 

The Petroleum Division in consultation with the Power Division along with the Finance Division was tasked to examine the matter of equity transfer to PSO against its receivables and present the issue before Cabinet Committee on Energy (CCoE) in the first place. 

The Cabinet, in its decision of January 11, 2022 ratified the CCoP’s decision with the stipulation that “the financial evaluation of Nandipur and Guddu power plants would be carried out subsequent to CCoE’s decision.”

PSO has so far proposed various non-cash options for the settlement of its receivables in order to unblock its trapped retained earnings from government department and others. The aim is to convert PSO’s non-productive receivables to productive assets while not burdening the government with cash-based settlement.

In regards to the proposed acquisitions, PSO may also be allowed to sell 30% of the power produced under B2B arrangement, whereas the rest can be dispatched to the national grid. 

PSO intends to refurbish the asset subsequently to improve their efficiency and position them for the merchant market based on the proposed transaction structure and modalities for NPP and GEPCO.


Ahmad Ahmadani
Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected].


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