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Pakistan’s biggest privatization on cards, globally renowned finance companies offer participation

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February 20, 2019 (MLN): Against a backdrop of insufficient foreign exchange reserves, mounting debts and a balance of payment crisis, Pakistan’s government is set to sell two LNG-fired power plants to bring in the needed finance, thus bringing about the country’s biggest privatization in over a decade. 

Pakistan is selling National Power Parks Management Company, the state-owned firm that owns and runs the 1,230-megawatt Haveli Bahadur Shah plant and the 1,223-megawatt Balloki plant. These plants are located in Punjab, the most populated province of the country.

The government aims to complete the privatization by the end of current fiscal year, that is, FY19.

According to a report by Bloomberg, big names of the global financial market including JP Morgan, CLSA, Credit Suisse, Citigroup and Standard Chartered have shown interest in taking part in this privatization, which is expected to raise around $2 billion.

Sources have revealed that Pakistan has received about 10 proposals from such companies seeking a role in financial advisory by means of which they intend to help sell stakes in the two power plants. Pakistan is expected to pick the banks by end of next month.

There is a buzz within markets that Citigroup Inc. and Standard Chartered Plc made their own separate proposals, while Pakistani brokerage Next Capital has confirmed that is pitching with Lazard Ltd on this project.

In conversation with Mettis Link News, Senior Research Analyst Sidrah Azmat informed that the proposal is yet to be submitted and it is still work in progress.

Endorsing the privatization, she termed it as a step in the right direction realizing the current circumstances and Pakistan’s dire need to raise funds. Other than this, she said that since RLNG is cheaper, the privatization of the plants will provide a much better alternative to RFO power plants which are pricier.

Moreover, Pakistan imports RFO which means that this privatization is bound to bring about a contraction in import bills.

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Posted on: 2019-02-20T12:00:00+05:00

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