ISLAMABAD, Oct 31: The Cabinet Committee on Privatization (CCoP) is likely to take up two major privatization deals on Tuesday including another extension to Etisalat of UAE to complete the PTCL transaction and transfer of KESC to second highest bidder led by Hasan Associates.
Informed sources told Dawn on Monday that the meeting to be presided over by Prime Minister Shaukat Aziz would be given a presentation on latest negotiations between a team led by Privatization Minister Dr Abdul Hafeez Sheikh and Etisalat management in UAE.
These sources said that the team was dispatched to the UAE on Sunday by the prime minister to hold last round of negotiations with Etisalat to complete the PTCL transaction.
They said the two sides held continuous discussions on Sunday night and Monday and reportedly agreed to allow two more weeks for finalization of the deal in view of top political level desire in both countries to make the transaction a success.
The sources said the minister was expected to attend the CCoP meeting on his return but there was no official confirmation about his flight schedule. In case of his absence, secretary privatization commission would brief the CCoP, these sources said.
These sources said Etisalat had demanded of the government to allow listing of PTCL shares at Dubai stock exchange which involved certain legal issues. It also wanted to pledge 26 per cent shares to raise financing from local and Pakistan-based foreign banks.
The Privatization Commission sources said the CCoP was also expected to ratify its earlier decision to transfer 73 per cent stakes along with management control of KESC to second highest bidder comprising KES Power Ltd of Al-Jummaih Group of Saudi Arabia, Hasan Associates and Premier Merchantile Services at a “matched highest bid of Rs1.65 per share”.
These sources said the CCoP had earlier granted a one-time relaxation in rules to allow a new entrant (KES of Al-Jummaih group) into the second highest bidding consortium subject to ratification by full federal cabinet meeting. Later, it was noted that there was no need for the cabinet approval.
The PC sources said the modified consortium led by Hasan Associates has agreed to match the highest bid of Rs20.2 billion at the rate Rs1.65 per share of KESC.
These sources said Al-Jummaih group, to be the main financier as well as operator of the KESC, would take over the management control of KESC after Eidul Fitr.
These sources said the big-ticket transactions like Pakistan State Oil, Pak American Fertilizers Limited and Pakistan Steel Mills Corporation were on right track and moving ahead.
The bidding for KESC had taken place in the presence of the representatives of the consortia of Hasan Associates and Kanooz Al-Watan of Saudi Arabia on February 4, 2005.
Kanooz Al-Watan was scheduled to pay Rs15.9 billion within one month after the issuance of Letter of Acceptance (LoA) but it backed out.
In addition, the new owner was required to inject Rs4.3 billion in preference shares. The second bid from Hasan Consortium was of Rs9.7 billion with a commitment of additional Rs4.3 billion in preference shares, amounting to total bid of Rs14 billion.
As a part of its effort to keep KESC as a going concern and continue to supply power to its consumers, the government injected Rs108 billion in KESC during the last three years. The company is causing an annual loss of about Rs15 billion to the national kitty. The new investor is also expected to inject additional investment that is required for upgrading the system.
NEPRA has approved a seven-year tariff for KESC irrespective of whether it was run by the public or private sector. The tariff formula also envisages reduction of tariff if the company starts making profits beyond a certain level.
The employees of KESC on contract will get an increase of 20 per cent in their salaries. The permanent employees will get an additional benefit of 10 per cent shares of KESC at a discounted rate.
