Top foreign banks bid for role in sale of two LNG plants
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KARACHI: JPMorgan Chase & Co, CLSA and Credit Suisse Group AG are pitching for a role on Pakistan’s biggest privatisation in a decade, expected to raise around $2 billion, according to a Bloomberg report.
Citigroup Inc and Standard Chartered Plc made their own separate proposals, while Lazard Ltd is pitching with Pakistani brokerage Next Capital Ltd.
According to experts privy to the deal, the government’s sale of two LNG-fired power plants could draw interest from Chinese and Middle Eastern investors. Pakistan has received about 10 bids from groups seeking a financial advisory role and expects to pick banks by the end of March.
“The sale will bring in much-needed foreign currency into the country, complementing foreign government loans and a likely IMF bailout package,” said Arif Rafiq, an analyst at the Washington-based Middle East Institute.
The report goes on to say that a representative for the Pakistan’s Privatisation Commission said the government has no comment. Representatives for CICC, Citigroup, CLSA, Credit Suisse, JPMorgan, Standard Chartered, Elixir Securities and Next Capital have also declined to comment. Representatives for Lazard, Bank Alfalah, Pak Brunei and Zeeruk also did not immediately respond to queries.
Published in Dawn, February 15th, 2019
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Comments (49) Closed
Feb 15, 2019 10:15am
Now these are best performing and modern plants which will be sold and govt will keep the old and inefficient plants ! Ask the investors to build new plants rather than benefiting from already done hard work.
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Feb 15, 2019 11:00am
Looks like investors are returning now that an honest PM is at the helm.
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Feb 15, 2019 11:06am
This government will sell everything and the next government will have nothing in hand. LNG plants are strategic energy assets and now foreign companies will control them.
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Feb 15, 2019 11:08am
This govt has only one policy ,sale and survive............
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Feb 15, 2019 11:10am
Excellent move by the government.
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Feb 15, 2019 11:20am
Basically you are selling your assets to get in $. Previous govt mortgaged it. Whats the difference?
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Feb 15, 2019 11:32am
Sell profit making entities, keep loss generating PIA, Railways and Pakistan Steel. Height of PTI Government competency Government.
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Feb 15, 2019 11:33am
Wrong move by incompetent government. They should first create an asset and then sell it for profit.
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Feb 15, 2019 11:36am
Why don't IK sell Bani Gala and Zaman Park properties and donate money to Government treasury. Why he is selling profit making most advance power plants.
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Feb 15, 2019 11:37am
Why Government is not selling PIA, Pakistan Steel and Pakistan Railway? Why they are wasting tax payers money to keep these loss making entities ?
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Feb 15, 2019 11:41am
At least ALL receipts will go to the exchequer and NOT in leaders own pockets like it used to during Sharif’ and Zardari’s terms. Pakistan will see the benefits of corrupt free environment soon that’s why the zardaris and sharifs are worried that their source of easy money is gone.
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Feb 15, 2019 11:44am
This is good step. Should had been done 5 years back.Have to do something about PIA and PSM.
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Feb 15, 2019 12:05pm
Why ?
If you can’t make a national asset then please don’t sell them
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Feb 15, 2019 12:06pm
@Pro Democracy , LNG plants can never be an asset, nobody in the world, except a few very poor/under developed countries might be interested in it.
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Feb 15, 2019 12:08pm
@Pro Democracy , I think you have not clue what is Economy and what you are saying
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Feb 15, 2019 12:11pm
Selling LNG and energy plants which are almost most times should give profits is not difficult. The idea should be to sell PIA and PSM and the likes that are making huge loses.
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Feb 15, 2019 12:12pm
All banks will be interested in any buying/selling advisory role as it is pure profit for them. It is another matter whether it is sold or not.
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Feb 15, 2019 12:12pm
Great move by the PTI government if true. Government should privatize all companies owned by public sector and focus on its real job which is to make policy and provide good governance
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Feb 15, 2019 12:14pm
@Pro Democracy ,
Privatisation is the way to make companies efficient, competitive and profitable - its the way world over.
Every state institution is otherwise loss-making from Railway, PIA to steel mill. Get educated!
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Feb 15, 2019 12:16pm
Pakistan is turning into a land of opportunity if the government decreases taxes through further privatization and eases rules and regulations of doing business. There are so much impracticable laws that it becomes almost impossible to do business with fair honesty. All such laws are proposed by bureaucracy, passed by politicians, to fill pockets of each other. This approach ruined economy in the past and PTI is supposed to change it by simplifying laws. The other day critics were chanting lower rating of Pakistan by S&P, Moody and Fitch. However, when there is an opportunity even American company JPMorgan Chase & Co won't bother to take those ratings into account. Go ahead PTI and privatize PSM and PIA too and simplify laws rather than making bureaucracy honest.
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Feb 15, 2019 12:17pm
SC in a verdict had stopped privatisation is steel mill Karachi, are these not national assets?
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Feb 15, 2019 12:27pm
This happens in countries where govt. spend more than 99 % to a train line as compare to Technologies. This govt has to think seriously about science and technologies, increase technology budget, start online education to get overseas student involve, invite big tech companies to open offshore offices.
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Feb 15, 2019 12:28pm
One more cake for Chinese investors from government.
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Feb 15, 2019 12:36pm
@Reality Bites, how will this help? I would appreciate your thoughts on this. Would it not be better for Pakistan to manage its national industries and make them more profitable? Thank you.
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Feb 15, 2019 12:36pm
@ pro democracy: your pro democratic leaders left trillion of dollars to create/ build assets. Government cannot run with such limited resources when every day Rs. 6 billion to be paid as an interest for inherited loans.
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Feb 15, 2019 01:18pm
@umar, previous governments policy was , sale and pocket...........
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Feb 15, 2019 01:18pm
@adi, once you sell, you cant dictate.
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Feb 15, 2019 01:39pm
good move
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Feb 15, 2019 01:57pm
These plants were installed by the previous government, attractiing PTI’s non stop criticism and allegation of corruption. It seems they can be sold on much higher price than the construction cost, indicating PTI criticism was baseless
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Feb 15, 2019 02:12pm
@Pro Democracy , But how do bring money to build an asset?
@Umar, how can that be said?
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Feb 15, 2019 02:26pm
Government selling profitable companies?
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Feb 15, 2019 02:38pm
Government must earn some money from the sale of these plants and money received from the sale proceeds of these plants should be used to modernize inefficient plants. It is not government job to run businesses and it should be private enterprenure job to run businesses, earn money and pay taxes on profit. True example is that present denationalized Banks were running on losses when they were under the supervision of government. Banks made turn around after denationalisation and since than alot of contribution is made by Banks towards National Exchequer by paying taxes, duties etc.
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Feb 15, 2019 02:40pm
@umar, Second policy is to borrow and spend and keep shouting last government did this did that ....
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Feb 15, 2019 03:46pm
Welcome to the fertile land of four seasons and soil of 225 million hardworking, talented and smart people, known as the Islamic Republic of Pakistan. Keep it up and hang on tough.
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Feb 15, 2019 03:49pm
The banks will rinse the profits and what will we get.
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Feb 15, 2019 04:11pm
@Zak, but we are selling.whats so great in it.these were built by shahbaz sharif and these are efficient plants.govt cant even think of privatising the old and inefficient plants
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Feb 15, 2019 04:17pm
@ads. Would you prefer government control over these decent plants and eventually being destroyed like PIA Pakistan Steel Mills? Through privatisation the government money and can be used to fix the sick units and privatise them too. This will raise revenue through taxation and Efficiency and employment for Pakistani workers.
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Feb 15, 2019 04:58pm
What sort of public policy is this. These LNG plants make tons of profits for the country. In fact they have already made billions of dollars and are poised to make more in coming years. These are equipped with latest technology and perhaps the only two projects where NAB could not find any corruption. Selling these would tantamount to big loss for the people. The simple logic is you don’t sell what makes profit.
I hope someone blows the whistle.
Allen
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Feb 15, 2019 05:17pm
Reminds me of selling of govt. assets in erstwhile USSR. Privatisation leads to higher prices for consumers and corruption for the rulers.
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Feb 15, 2019 06:59pm
Question, how much these two plant owe to the creditors? What is their share holding pattern?
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Feb 15, 2019 07:58pm
Please DO not sell these. These are owned by Pakistan... Make them make new ones or sell Old ones. WE do not want foreign people owning this homeland company
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Feb 15, 2019 10:01pm
Imran khan is in for the long haul. It will be wise if new Leadership emerges the the decrepit PPP and PML-N.
There needs to be a broader dialogue on crucial matters such as Gas and Energy sector.
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Feb 15, 2019 10:02pm
More transfer of assets from the poor to the rich. We have seen this in the West and this is going to happen in Pakistan. We need to keep hold of these assets
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Feb 15, 2019 10:12pm
@adi, Keep in mind Pakistan steel mills was also state of the art and PIA was considered a top world airline. Do you want to wait till this LNG plant becomes inflicted with cancer like all the other state institutions after 15-20 years of their operation?
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Feb 15, 2019 10:50pm
Energy-related installations are security assets. Ask the investors to build a new "clean air " plant. Do not sell our best performers. Someone is looking to get rich quick.
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Feb 15, 2019 11:50pm
@Juxtice, - you will know in few years whether money gone in the exchequer or somebody’s private account.
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Feb 16, 2019 12:30am
Wonder when our public will understand. No one is going to purchase loss making entities. Government has to make them up and running. If these 2Bn$ can be used to fix existing plants, government is playing very strategically.
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Feb 16, 2019 12:38am
@Economizer, - Guess you don’t understand what is the work of these US banks. There role is advisory in selling these plants and they get paid in USD by Pak government. Once deal is done they have nothing to with these plants. Even if plants are not sold they will get paid in USD. So, every bank who think can get this order will participate in such process.
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Feb 16, 2019 01:27am
@Pro democracy, It's only in socialist countries where governments run business entities. The other countries where governments own their energy production are the poor countries who can not attract investment. We should feel lucky if some one buys these plants and the money from this sale can build schools and hospitals. Foreign investors normally do not put their money on dead horses like Steel Mills so get the sick units running before someone shows any interest in them.
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