ISLAMABAD: The government’s attempt to auction off three inefficient power plants received minimal interest, forcing it to schedule a second round of bidding at the end of May.
Out of the three plants on offer, only one — the Jamshoro Power Company Ltd (JPCL) — drew a bid, submitted by Siddiqsons, a firm based in Karachi. The other two plants, located in Muzaffargarh and Faisalabad, failed to attract any offers. The combined reserve price for all three facilities — with a total generation capacity of 2,362MW — was set at Rs26.625 billion.
The auction followed a ‘single-stage two-envelope’ bidding process to ensure transparency, with May 19 as the original deadline. However, due to the weak response, the Ministry of Energy (Power Division) has extended the bid opening date to May 30.
The sale involved three ageing and non-operational plants: the 880MW Jamshoro Thermal Power Station, the 1,350MW Northern Power Generation Company Ltd (Muzaffargarh), and the 132MW Central Power Generation Company Ltd (Faisalabad Steam Power Station). All were offered on an “as-is, where-is” basis.
Lack of Interest Forces Delay
While the Jamshoro plant attracted a solitary bid, the Muzaffargarh and Faisalabad units received none. The Power Division revealed that a total of 29 old power plants with a combined capacity of 4,074MW have been identified for auction, with an overall reserve price of Rs40.461 billion. These include facilities at Jamshoro, Guddu, Muzaffargarh, Quetta, and Faisalabad.
Bidding for other Genco-II plants, including the Guddu and Quetta thermal power stations, has been delayed. These assets will now also be offered on May 30, with the government hoping revised terms will draw more investor interest.
Sabih-uz-Zaman Farooqi, CEO of Northern Power Generation Company Ltd (NPGCL), acknowledged the lukewarm investor response, noting that selling obsolete and aging assets was always expected to be a gradual process, given the technical complexities and varying viability based on location and condition.
Previous Auctions, Tax Concerns, and Bidder Demands
In an earlier round, the government successfully sold seven thermal units for Rs9.05 billion — exceeding the reserve price of Rs8.07 billion. Those units were spread across Kotri, Larkana, Sukkur, Multan, and Faisalabad.
Farooqi said authorities will review the reasons behind the absence of bids for the Muzaffargarh and Faisalabad plants.
During pre-bid consultations, potential buyers raised concerns about tax liabilities — specifically the applicability of income and sales taxes, and whether the metal content of the plants would be considered scrap, which could affect tax exemptions. However, NPGCL clarified that the plants were not being sold as scrap, and thus, standard tax rates apply: 18% sales tax for registered firms and 22% (including 4% additional) for unregistered entities. Advance income tax would be 10% for active taxpayers and 20% for non-filers.
Bidders also requested a reduction in the required performance security deposit from 10% to 5% of the contract value, along with greater transparency, such as item-wise reserve prices. However, the NPGCL declined these requests, maintaining that all conditions outlined in the bidding documents must be followed.
