KARACHI, May 4: The pace of privatization of the Sui Southern Gas Company picks up as the Asian Development Bank, in collaboration with the Privatization Commission, appoints a financial adviser for the gas utility.

Senior SSGC officials told Dawn on Saturday that the PriceWaterhouse and Coopers (PWC) had been tasked to prepare a comprehensive report on the sell-off of the gas utility. The PWC would also be working as financial adviser to the Sui Northern Gas Pipelines.

They added that a contract had been signed under which the ADB would pay the PWC and the Privatization Commission would monitor the sell-off process, ensuring cooperation from the utilities whose reports would be made by the PWC.

The PWC is currently working as financial adviser to the Karachi Electric Supply Corporation. It has submitted its report, highlighting the administrative and financial areas the power utility will have to streamline before it is privatized so that it can fetch a good price.

“The ADB asked the Privatization Commission if it has any objection to the appointment of the PWC. The latter said that it had no objection. This was done to lay to rest the speculation that the PWC is a favourite financial adviser of the ADB,” sources said.

They added that in the first phase of evaluation the financial adviser would study various proposals and recommendations regarding the privatization of the SSGC and the SNGPL.

An SSGC document, titled “Objectives of the gas sector restructuring process”, recommends “implementation of unbundling and corporatization”. It suggests that “individual transmission and distribution entities should be established as subsidiaries of each of the existing companies. The proposal adds that each entity would have its own share structure.

The document also lays down the parameters within which the financial adviser would operate. The financial adviser will focus on marketing, valuation, preparation of information memorandum and transaction documents, and support to the bidding process.

The sources said the Privatization Commission would also independently study the “unbundling” proposal.

They added that if the government tried to sell the companies as they were, then it would take one year. “If the government opts for the unbundling proposal, the entire process would take at least three years.”

Meanwhile, investors have taken little interest in buying the KESC. The Privatization Commission has received only two expressions of interest for the KESC’s sell-off despite the fact that 50 investors had been contacted, the sources said.

They added that the continued losses of the KESC was one reason why independent investors were not keen to buy it. “During July and December last year, the KESC suffered a net loss before taxation of Rs8.7 billion. Last year, the KESC had suffered a net loss of more than Rs16 billion.”