Petroleum Division has requested comments on Pakistan State Oil’s (PSO) plan to acquire shares of GEPCO and Nandipur Power Plant against pending dues of Rs. 100 billion.
The Petroleum Division submitted a draft summary to the Prime Minister before approaching the Cabinet Committee on Energy (CCoE). So far, the Power Division hasn’t submitted any comment, and further delays may render the investigation premature and inconclusive, reported Business Recorder.
In response to the Petroleum Division’s request, the PM’s office stated that the transfer of DISCOs to provinces is currently being discussed with the provinces, while GEPCO’s transfer is also being discussed with the Punjab government.
Comments on the appropriateness of the parallel proposal for the sale of GEPCO to PSO may be provided in the circumstances. Petroleum Division has requested that the necessary views/comments on the draft summary, as well as the observations raised by Prime Minister’s Office to Petroleum Division, be provided as soon as possible. Meanwhile, the Petroleum Division, in consultation with the Power Division and Finance Division, will investigate the proposed equity transfer to PSO against its receivables and present it to the CCoE first.
According to the Petroleum Division, if the proposed option is successfully implemented, it will benefit both parties by reducing PSO’s circular debt receivables while requiring no cash outflow. Because the power plants are income-generating assets, a significant portion of their earnings will still flow back to the government in the form of dividends and taxes.
Pertinently, PSO has proposed a number of non-cash settlement options for its receivables in order to unblock its trapped retained earnings from government departments and others.
PSOs may also be permitted to sell 30 percent of the power generated under the B2B arrangement, with the remainder being dispatched to the national grid. Based on the proposed transaction structure and modalities for NPP and GEPCO, PSO intends to refurbish the asset in the future to improve its efficiency and position it for the merchant market.
Source: Pro Pakistani