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Jamshoro Power Company: financial adviser accused of delaying sell-off

ISLAMABAD (April 04 2005): The Privatisation Commission (PC) has accused the Financial Adviser, Abacus Consulting, Lahore, local contractor of Pricewaterhouse Coopers, of delaying government programme to take Jamshoro Power Company (JPC) transaction to bidding stage at the earliest, sources in Commission told Business Recorder. “The Financial Adviser furnished evaluation report with considerable delay and after a number of reminders, which is not acceptable,” said a PC official.

The representative of Financial Adviser who attended a meeting under the chairmanship of Iftikhar-ul-Haq, Member Privatisation Board, when asked to comment on the reasons of delay, refused to comment, saying that he had only the mandate to make the presentation on the evaluation report and not to discuss contractual matters, the official said.

On the status of data room to be set for the transaction, the representative of Financial Adviser informed the meeting that it was not ready and needed to be updated.

According to PC official, the committee took serious note of delaying tactics by FA, and advised that the evaluation was already delayed and FA should take steps not to delay the transaction. The committee also observed that in future the FA should dispatch team leader or someone familiar with the transaction and with mandate to discuss all relevant issues.

The FA was asked to immediately provide a timetable the Financial Adviser's obligations related to the transaction specially the setting up of data room.

The official said that four parties meet the financial criteria set in the Expressions of Interest (EoIs) while only two parties AES Oasis Limited and China National Manufacturing and Equipment Import and Export Corporation with world-wide experience in thermal power plants besides installation of power plant units in JPC and Mazaffargarh on turn key basis meet respectively both eligibility criteria, hence may be pre-qualified.

The other two parties ie Consortium of Abbas Power Generation limited including Al- Abbas group in sugar business with captive power of 6 MW and Janangir Siddiqui in capital market and Engro Pakistan Chemical Limited in fertiliser business with 45 MW captive units meet the financial criteria only but not the technical criteria.

They have, however, indicated that they intend to form association with the utility experts and have made a number of them in this respect without providing association agreement with. The FA has recommended that they might be pre-qualified, conditionally, subject to providing consortium agreement within a stipulated timeframe.

After a detailed discussion on the issue, the committee observed that JPC bidding would not be affected if one or two pre-qualified parties decided not to participate in the bidding process, because consortium of Al-Abbas Power Generation Limited and Engro Chemical Limited may be pre-qualified conditionally subject to their meeting the technical criteria prior to bidding. This would enable a larger participation in the bidding with more competition and higher sales proceeds to GoP.

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