Both power plants were put on the active list for privatisation by the PTI’s previous administration in an effort to raise approximately $1.5 billion for budget financing.
Pakistan’s government has decided to sell two LNG-fired plants as the threat of default looms over the cash-strapped nation, according to Pakistani news outlet Express News.
According to the report, the two power plants, which were built concurrently with the first LNG terminal during Nawaz Sharif’s administration, were put on an active list for privatisation in order to raise an estimated $1.5 billion.
Following a recent meeting to remove power plants from the privatisation programme, a new cabinet committee of the Sharif-led administration approved selling the National Power Park Management Company Private Limited’s plants on a priority basis.
The Board of the Privatisation Commission made no comment in order to keep the situation under wraps, the report added.
The Sharif-led administration approved a directive last year to bypass all criteria for the procedure and to do away with regulatory inspections, including the necessity of applying pertinent legislation.
The change occurs at a time when the South Asian nation faces a looming threat of default as a result of the delayed reactivation of the International Monetary Fund’s programme.
Official foreign exchange reserves for the nation have also plummeted and the sale of the LNG-fired power stations has been identified by Finance Minister Ishaq Dar as one of the “low-hanging fruits” that would be sold to raise foreign cash.
After making two commercial loan debt payments totalling $1.02 billion on Friday, Pakistan’s gross official foreign exchange reserves fell below $4.5 billion. According to the central bank, the entire amount of debt repayments for the current fiscal year is $23 billion.
The PCB made the decision in September 2022 to once again work with Credit Suisse, Singapore to estimate the cost of the multibillion-dollar LNG-fired power plants that Qatar has been interested in purchasing for the past four years.
The privatisation of two LNG power plants with a combined generation capacity of 2,560MWs has been hampered by three major outstanding issues, including Credit Suisse’s approximately $1.7 million in unpaid debt.
Pakistan hired Credit Suisse in April 2019 to sell the plants, but the agreement was extended for an additional 1.5 years until October 2020. However, as a result of all parties’ subpar performance, the contract expired once more on April 29, 2022.
Qatar had reportedly promised the IMF board in August of this year that it would invest $3 billion in Pakistan, including the purchase of both plants, in order to close a financing gap noted by the IMF staff.