National Power writes down Pakistani projects

The UK's National Power PLC, the major stakeholder in Pakistan's Hub Power Co. and the Kot Addu Power Complex, has slashed the value of its holdings in the projects to �131 million from a cumulative �262 million, sources reported. NP's board of directors made the decision after an unresolved years-long dispute with the Pakistani government and power regulating agencies.


KARACHI�The UK's National Power PLC, the major stakeholder in Pakistan's Hub Power Co. and the Kot Addu Power Complex, has slashed the value of its holdings in the projects to �131 million from a cumulative �262 million, sources said.

NP's board of directors made the decision after an unresolved years-long dispute with the Pakistani government and power regulating agencies. The dispute led the NP board to take a pessimistic view of the situation and to take a "prudent way" of reassessing the assets in the two controversial power projects, the sources said.

While negotiations are being pursued to settle the Hub Power and Kot Addu disputes, observers explained, it is impossible at this stage to determine what impact any eventual settlement would have on the value of NP investments in the two power projects. Accordingly, NP determined to write down the value of its investment by �44 million in Hub Power Co. and by �87 million in Kot Addu, it added.

National Power holds more than 25% of Hub Power shares and a 36% interest in the 1,600 Mw Kot Addu Power Complex, the only power project so far privatized by the government. Moreover, National Power has also decided to treat its capital investment in the Kot Addu power project as "trade investment," sources said.

Experts said NP's writing down of the value of its assets is a meaningful step that could foreshadow the sale of its stake in the two troubled projects. NP is reported to be in talks with AES Corp. of the US about selling its shares of the projects

Observers reported Hub Power's board met in Dubai May 18.The coming days may witness a deal taking shape, sources said. Hub Power has remained highly vulnerable for more than 3 years over buy-back tariff and other issues.

The government and Water and Power Development Authority, the sole purchaser of Hub Power's electricity, are asking the company to reduce its power tariff significantly, as they consider the present tariff highly inflated. They also question the validity of Hub Power's power purchase agreements.

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