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Pakistani sell energy assets to save economy from collapse

Rising rumours of an imminent financial default made Pakistani government lay out an emergency plan to dispose of its multibillion-US-dollar energy assets to raise money.

Among the first in line is the sale of rich Qadirpur gas field in Sindh. It is considered worth more than 3 billion dollars in international markets and is also regarded as a vital strategic asset.

The Privatisation Commission has already recommended different options on Qadirpur field privatisation, prepared by financial adviser US-based Merrill Lynch, to the cabinet committee on privatisation for a final decision. A source close to the deliberations said a decision would be taken by September 25th over when to open the bidding.

Among the likely suitors are Austrian OMV and some state-owned corporations from the Persian Gulf, such as Kuwait Petroleum Corporation (KPC), who may finalise their final bids by the end of this month.

Two other national jewels in top slots of planned privatisation include the billion-dollar 880-megawatt Jamshoro Steam Power Plant, and strategic shares in Kot Addu power plant, operated by Kapco, the country's largest independent power producer.

But the planned sales might trigger political tensions in the new ruling coalition, as the two key allies have taken divergent positions on the issue and both have warned Pakistan Peoples Party (PPP) of grave consequences if the decision is taken against their will.

Awami National Party (ANP) from North West Frontier Province supports the sell-off deals but wants their member to parliament to be appointed as the oil minister before the agreements are signed. On the other hand, Muttahida Qaumi Movement, a major partner in both Sindh and federal capital Islamabad, has threatened to mobilise a mass movement against the planned sales of the oil and gas fields. "In this scenario selling energy assets and expediting privatisation effort is one sure ticket to wriggle out from the current financial morass," said Saad bin Ahmed, head of research at Capital One Equities.