Govt plans to transfer Nandipur assets to PSO

The government has planned to place assets of Nandipur power plant (NPP) in a separate entity in order to hand over its controlling interest to Pakistan State Oil (PSO) for paying some of its outstanding dues. This will help the cash-starved PSO, the country’s largest oil marketing company, to reduce its huge circular debt receivables. Finance Division, in an office memorandum, said that it had considered the proposal in a draft summary and the proposed transaction was meant to settle PSO’s claims of receivables against NPP and Guddu Power Plant (GPP). However, it stated that the summary proposed the transfer of Gujranwala Electric Power Company’s (Gepco) controlling interest, instead of GPP, in deviation from the federal cabinet’s decision. “The Ministry of Energy (Petroleum Division) may, therefore, provide justification for proposing Gepco, instead of GPP, for the purpose,” the Finance Division said, adding that the proposed NPP transaction structure suggested that “the government would carve out assets of the power plant in a separate entity”, after clearing all its active and contingent liabilities. It pointed out that the financial impact of clearing all liabilities of NPP and GPP was not available for comparative evaluation while Power Division’s comments on the proposal may also be shared.