The United Arab Emirates (UAE) has reportedly expressed its intention to acquire combined cycle 747-MW Guddu Power Plant (GPP), well-informed sources in Privatisation Commission (PC) told Business Recorder. The intention to acquire Guddu Power Plant emanated from the Department of Projects, headed by Sheikh Hamad Bin Khalifa Bin Mohammed Al Nahyan in a letter to Prime Minister Imran Khan.

“We understand that the Government of Pakistan is in the process of privatisation of Guddu Power Plant and has already advertised, commenced, and appointed Financial Advisor. We express our intention in compliance of all procedural requirements to acquire the plant and look forward to work with Pakistan,” says the letter.

Prime Minister, Imran Khan is planning to undertake an official visit to UAE soon as the Ministry of Foreign Affairs has begun preparation in this regard.

Last month, Federal Cabinet had approved the financial evaluation of the 425-MW Nandipur Power Plant (NPP) (with potential of 525 MW) and 747-MW Guddu Power Plant for subsequent privatisation.

The sources said Privatisation Division has also briefed the Cabinet Committee on Privatisation (CCoP) about its plans with respect to both the combined cycle power plants and sought to issue necessary direction to the Ministry of Energy for obtaining the decision of Cabinet Committee on Energy (CCoE).

Privatisation Division has also proposed that in the event of moving forward with privatisation of GPP and NPB concerned Ministries may be directed to take necessary actions to resolve the problems hampering privatisation of these power plants.

The CCoP, while approving the proposal, directed Privatisation Division to continue the process of financial evaluation of Nandipur and Guddu power plants along with their assets and in the meanwhile, the Petroleum Division in consultation with the Power Division and Finance Division may examine the matter of equity transfer to PSO against its receivables and present the issue before CCoE.

However, when the CCoP decision was placed before the Federal Cabinet on January 11, 2022 for ratification, Cabinet Secretary, Sardar Ahmad Nawaz Sukhera, who has also served as Secretary Privatisation, suggested that in the case titled ‘Privatisation of Guddu Power Plant & Nandipur Power Plant’, the option of equity transfer to PSO against its receivables may not constitute ‘privatisation’, as it would be a transaction between government entities, and the legal position may be rechecked from the ‘modes of privatisation’ provided in the Privatization Commission Ordinance, 2000. It was also highlighted that in such a case the evaluation should be done by a third party.

Minister for Energy Hammad Azhar and Minister for Finance Shaukat Tarin stressed that the privatisation process should not be stalled and the receivables of PSO could be settled from the proceeds of privatising the two power plants. The decision of CCoP to present the issue to CCoE should; however, be ratified.

After a brief discussion, the Cabinet also ratified the decision of CCoP in the case titled ‘Privatisation of Guddu Power Plant & Nandipur Power Plant’ with the stipulation that the financial evaluation of Nandipur and Guddu power plants be carried out subsequent to CCoE’s decision.

On February 16, 2022, Finance Division asked Power Division and Petroleum Division to present the issue before CCoE in the light of CCoP and Cabinet’s decisions.

On March 7, 2022, Privatisation Commission asked Petroleum and Power Divisions to take early action in this regard so that there is clarity on way forward with regard to Guddu Power Plant and Nandipur Power Plant.

This story was first published in Business Recorder on March 10, 2022.