Daily Times

Federal Minister for Privatisation Mohammed Mian Soomro said that the federal government was in the process of privatising the National Power Parks Management Company Limited (NPPMCL) which owned two power plants of Haveli Bahadur Shah Power Plant (1230 MW) in District Jhang and Balloki Power Plant (1223 MW) in District Kasur.

He expressed these views while chairing a meeting held with heads of local commercial banks here at State Bank of Pakistan for debt refinancing of National Power Parks Management Company Limited (NPPMCL) on Friday.

Federal secretary ministry of privatisation, senior officers of privatisation and State Bank of Pakistan, representatives of the ministry of finance attended the meeting. Both the power plants were set up with GOP funding or equity instead of the 70:30 debt to equity ratio benchmark as allowed in NEPRA’s tariff for NPPMCL’s Power Plants, he told,

The federal minister said it has decided to align the capital structure as per allowed tariff through long-term debt financing from the banks.

Soomro said that the privatisation of NPPMCL is a large transaction, directing that the privatisation commission will coordinate with all stakeholders to fulfil the national cause. On the occasion, Director General Privatisation Ministry, Muhammad Jameel told that the aim of the meeting was to discuss debt recapitalisation and refinancing or replacement of GOP excess equity and PDFL loan through commercial borrowing of NPPMCL.

Once the debt portion of these two power plants was settled, they would be privatised, he said. A comprehensive representation of the issue was presented by the ministry of privatisation and a thorough discussion was made on the terms and conditions of the refinancing process.

Presenting the terms of borrowing, another official from the ministry of privatisation said that all commercial banks and financial institutions regulated by the State Bank of Pakistan are eligible to submit their bids. The loan amount is up to Rs113 billion. Tenure would be seven years and the principal amount would be repayable on a quarterly basis as per NEPRA guidelines.

Besides, profit on debt or interest would be payable on a quarterly basis as per NEPRA guidelines. In addition, Collateral or security would be as per the terms of Power Purchase Agreements and Implementation Agreements of the power projects, it was told in the meeting.

Moreover, the maximum ceiling on the fixed spread is 1.8 per annum NPPMCL may draw down the loan at any time in one or more instalments. The meeting was informed that the repayment dates of mark-up and principal will be 30th September, 31st December, 31st March and 30th June. The repayment would begin at the end of the quarter in which 1st drawdown of funds would be taken.

Aside from this, bidding and transaction award criteria are that the loan shall be obtained from the bidder offering the lowest (fixed) spread relative to six months KIBOR as per NEPRA guidelines. The pricing levels quoted by the bidders shall be all-encompassing and no extra fee/cost/expense shall be paid by NPPMCL in any case, the meeting was briefed.

Selection Criteria consists of bids above the maximum ceiling of K+1.8pc not to be considered. Both individual bidding and multiple bids would be allowed. The minimum bid size should be Rs1 billion and bids in the multiple should be Rs1 billion. NPPML will determine the cut-off spread and cut-off spread would be offered to all successful bidders.