KARACHI: Pakistan has invited Expressions of Interest (EOI) for the privatization of two Re-Gasified Liquefied Natural Gas (RLNG) based power plants, currently managed by the National Power Parks Management Company (NPPMCL), according to an advertisement uploaded on the Pakistan Privatization Commission website on Sunday.
The plants were built with funds used from a development fund set up in 2013, with $1.5 billion gifted by then Saudi King Abdullah. Now, Pakistan expects to generate around $2 billion from the sell-of
The commission has drawn up a list of 17 state-owned entities for privatization and has sought official EOI from potential investors for the 1,223 megawatts Balloki and 1,230 megawatts Haveli Bahadur power plants- considered two of the most efficient RLNG plants in the world.
Last year, Saudi investors had shown an interest in acquiring the two plants through a government-to-government deal, but the Pakistan government decided to follow legal procedures for privatization and the deal didn’t go through.
“Saudis are one of the most high potential investors for these plants. They had also previously shown an interest in an oil refinery, agriculture, and livestock, technology, and tourism, among many other sectors,” a member of the privatization board, who declined to be named, told Arab News on Sunday.
Interested investors are required to submit their EoIs no later than Dec. 23.
The South Asian country, home to 210 million people, faced huge economic imbalances and availed a $6 billion bailout from the International Monetary Fund (IMF) in July this year.
Now the country is hoping to raise more funds through the privatization of loss-making state-owned entities and to build up its foreign exchange reserves as suggested by the IMF.
Analysts say that the privatization of power plants will ensure operational efficiency and bring in much needed foreign exchange for the country.
“I think it's positive because the government shouldn’t be in business, and should only act as a strong regulator. The transaction will bring required dollar in-flows as well as efficiency in operations,” Samiullah Tariq, Director Research at Arif Habib Limited, a brokerage, told Arab News.
The Haveli Bahadur Shah Project is the most efficient power plant in the world with an unprecedented efficiency of 62.45 percent on R-LNG fuel.
This high efficiency translates directly into huge savings for the national exchequer through fuel cost savings and provides cheap electricity to the masses and industry. The plant started commercial operations on May 9, 2018.
The Balloki plant has an efficiency of greater than 61 percent. It entered commercial operations in July last year and generates the equivalent power needed to supply more than six million homes, according to the NPPMCL.
The Cabinet Committee on Privatization approved the privatization of the two plants in September. Under the approval, if the highest bidder for both plants is the same, the investor will be able to buy the combined entity. But a de-merger will be a condition for the transaction if the bidders for both plants are different.