Chinese firms begin due diligence of Pakistan Steel Mills

Updated April 05, 2020

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A general view of the deserted hot strip mill department of the Pakistan Steel Mills .— Reuters/File
A general view of the deserted hot strip mill department of the Pakistan Steel Mills .— Reuters/File

ISLAMABAD: The Privatisation Commission (PC) has shared the first draft of human resource, financial and tax due diligence with the Pak-China Investment Company (PCIC) and the Bank of China (BoC) for the purpose of reviving Pakistan Steel Mills (PSM).

In an update on the privatisation programme, the commission said on Saturday that the Financial Advisers’ Services Agreement (FASA) has already been signed with the PCIC and the BoC, and a team of China’s Sinosteel has recently been on a visit to Pakistan.

The draft of human resource, financial and tax due diligence were shared with the Ministry of Industries and Production (MoIP) and the PSM management on Thursday for their review and inputs before placing it and the proposed transaction structures for approval of the Cabinet Committee on Privatisation, the statement said.

Due to the ongoing Covid-19 pandemic, the PC team — led by Minister for Privatisation Muhamm­admian Soomro — along with Adviser to the Prime Minister on Energy Nadeem Babar held a series of video conferences and meeting during the week with pre-qualified investment parties for the privatisation of the two RLNG power plants: Haveli Bahadurshah and Balloki of the National Power Plant Management Company Limited (NPPMCL). Nepra chairman also participated in the discussion.

The impending legal and technical issues relating to the privatisation of the two power plants have been sort out amicably with the provincial governments and line ministries, the commission said in its statement.

These include ‘true-up’ tariff by Nepra, amendment in land conversion rules and water use agreements for power plants by the Punjab government and alignment of gas supply and power purchase agreements by the ministries of power and petroleum resources in the context of RLNG agreements, prevalent till 2025, the statement added.

The commission said that relevant information has been uploaded on the virtual data room (VDR) for due diligence by the pre-qualified bidders.

Presently, investors’ due diligence is in progress, but physical site visits of the pre-qualified bidders could not be scheduled due to the current national and international lockdown situation.

Published in Dawn, April 5th, 2020