public procurement regulatory authority (ppra)...
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ATTACHMENT – I (See regulation 2)
PUBLIC PROCUREMENT REGULATORY AUTHORITY (PPRA)
CONTRACT AWARD PROFORMA – I
To Be Filled And Uploaded on PPRA Website In Respect of All Public Contracts of Works, Services and Goods Worth Fifty Million or More
NAME OF THE ORGANIZATION Privatisation Commission__
FEDERAL / PROVINCIAL GOVT. Federal Government_________
TITLE OF CONTRACT Financial Advisory Services Agreement___
TENDER NUMBER TS398727E ______
BRIEF DESCRIPTION OF CONTRACT Divestment of Government ofPakistan shareholding in 425-525 MW CCPP Nandipur of NPGCL
TENDER VALUE Approx. PKR 360 Million ___
ENGINEER’S ESTIMATE N/A_________________________ (for civil Works only)
ESTIMATED COMPLETION PERIOD February, 2021 WHETHER THE PROCUREMENT WAS INCLUDED IN ANNUAL
PROCUREMENT PLAN? _________ N/A _____________Yes / No
ADVERTISEMENT :
(i) PPRA Website____30-08-2019____ TS398727E _____Yes / No(Federal Agencies) (If yes give date and PPRA’s tender number)
(ii) News Papers_Yes (List of Newspapers / Press at Annex – I) Yes / No(If yes give names of newspapers and dates)
TENDER OPENED ON (DATE & TIME) _December 09, 2019 at 02:30 p.m._
NATURE OF PURCHASE_Both Local and/ International_ Local /International
EXTENSION IN DUE DATE (If any)_____ No ____Yes / No
-: 2 :-
NUMBER OF TENDER DOCUMENTS SOLD 2 (Annex – II) (Attach list of Buyers)
WHETHER QUALIFICATION CRITERIA
WAS INCLUDED IN BIDDING/TENDER DOCUMENTS _Yes__Yes / No (Annex – III) (If yes enclose a copy).
WHETHER BID EVALUATION CRITERIA
WAS INCLUDED IN BIDDING/TENDER DOCUMENTS_ Yes __Yes / No (Annex – III) (If yes enclose a copy).
WHICH METHOD OF PROCUREMENT WAS USED: - (Tick one)
a) SINGLE STAGE – ONE ENVELOPE PROCEDURE ________
b) SINGLE STAGE - TWO ENVELOPE PROCEDURE. ________
c) TWO STAGE BIDDING PROCEDURE. ___________________
d) TWO STAGE – TWO ENVELOPE BIDDING PROCEDURE.___
- PLEASE SPECIFY IF ANY OTHER METHOD OF PROCUREMENT WAS
ADOPTED WITH BRIEF REASONS (i.e EMERGENCY, DIRECT
CONTRACTING, NEGOTIATED TENDERING ETC.)
- WHO IS THE APPROVING AUTHORITY__ Chairman, Privatisation
Commission WHETHER APPROVAL OF COMPETENT AUTHORITY WAS OBTAINED
FOR USING A METHOD OTHER THAN OPEN COMPETITIVE BIDDING. N/A
NUMBER OF BIDS RECEIVED__________2___________
WHETHER THE SUCCESSFUL BIDDER WAS LOWEST BIDDER_ No
Yes / No
WHETHER INTEGRITY PACT WAS SIGNED __ Yes__ Yes / No
ATTACHMENT – II (See regulation 2)
PUBLIC PROCUREMENT REGULATORY AUTHORITY (PPRA)
CONTRACT AWARD PROFORMA – II
To Be Filled And Uploaded on PPRA Website In Respect of All
Public Contracts of Works, Services & Goods Worth Fifty Million Rupees or More
NUMBER OF BIDDERS PRESENT AT THE TIME OF OPENING OF BIDS __1_
NAME AND ADDRESS OF THE SUCCESSFUL BIDDER Consortium of M/s United Bank Limited (UBL) and M/s
Address
United Bank Limited, 13th Floor, UBL building, Jinnah Avenue, Blue Area, Islamabad;
EY Ford Rhodes 601-603, Progressive Plaza, Beaumont Road, Karachi;
-: 2 :-
RANKING OF SUCCESSFUL BIDDER IN EVALUATION REPORT (i.e. 1st, 2nd, 3rd EVALUATED BID).
Consortium / Interested Party (IP) Ranking
Consortium of United Bank Limited (UBL), EY Ford Rhodes (EY), HaiderMota Advocates & Co. (HaiderMota) and NESPAK 1
NEED ANALYSIS (Why the procurement was necessary?) Federal Government Policy
IN CASE EXTENSION WAS MADE IN RESPONSE TIME, WHAT WERE THE
REASONS (Briefly describe) N/A
WHETHER NAMES OF THE BIDDERS AND THEIR PRICES WERE READ
OUT AT THE TIME OF OPENING OF BIDS____ Yes___Yes / No
DATE OF CONTRACT SIGNING _________19-02-2020_(Annex – IV)______ (Attach a copy of agreement)
CONTRACT AWARD PRICE___________ Approx. PKR 360 Million _______
WHETHER COPY OF EVALUATION REPORT GIVEN TO ALL BIDDERS__ YES Yes / No
Evaluation Report uploaded on PPRA’s website (17-01-2020) (EV27157) (Attach copy of the bid evaluation report) (Annex – V)
ANY COMPLAINTS RECEIVED_____ No.___Yes / No (If yes result thereof) ANY DEVIATION FROM SPECIFICATIONS GIVEN IN THE TENDER NOTICE/DOCUMENTS_____ No___Yes / No (If yes give details)
DEVIATION FROM QUALIFICATION CRITERIA____ No___Yes / No (If yes give details)
SPECIAL CONDITIONS, IF Any ___N/A______
[F.No.2/1/2008PPRA-RA.III]
Annex – I
Names of Newspapers and dates where EOI Advertised
Sr. No. Name of Local Press EOI Advertised Date
1. Daily Express Tribune August 28, 2019
2. Daily Dawn August 28, 2019
3. Daily Jang August 28, 2019
4. Daily Express August 28, 2019
Sr. No. Name of International Press EOI Advertised Date
5. Financial Times (World Edition) August 30, 2019
Annex – II
List of Parties
PC forwarded the Request for Proposal (RFP) Package with the request to submit the Technical & Financial Proposals for
Financial Advisory Services for Privatisation of NPPMCL
(1) Consortium of United Bank Limited (UBL), EY Ford Rhodes (EY) (2) Consortium of (i) Fieldstone Group, (ii) Bank of Punjab, (iii) Grant Thronton Anjum
Rahman & (iv) Capital Resource.
Annex – III
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FINANCIAL ADVISORY SERVICES AGREEME�T
This Agreement Financial Advisory Services Agreement hereinafter called the Agreement is made on the 19 day of the month of February, 2020:
Between
The Privatis:ition Commission, Government of Pakistan, having its of�ice at Kohsar Block, Pak Secretariat Constitution Avenue, Islamabad (herei:1after called he "Client" and for c.voidance of doubt does not include any other agency or entity of the Government of Pakistan) on the one hand;
and
United Eank Limited, a banking company incorporated unc:.er the laws cf Pakistan having its registered office at 13th Floor, UBL building, J:nnah Aven-Je, Blue Area, Islamabaj;
EY Ford Rhodes having its registered office and principal place of busines!!: at 601-603, Pro5re!!:sive Plaza, Beaumont Road, Karachi, and for avo:dance of doubt does not include any other member of the global network of EY firms, each of ·Nhich is a separate .eg::il entity;
(hereinafter collectively called the "Financial Advisor") on :he o
[The Client and the Financial Advisor are individually re collectively as Parties]
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Annex - IV
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WHEREAS
?he Client has published the "Expression of Interest" to engage tl:e servi:es of the Financial Advisor with the sub-contractors to provide certain services as defined in Appendix 'A' of this Agreement (Lereinafter called the "Services");
In response to the Expression of Interest, the Client issued the 'Request for Proposal "to the shortlisted interested parties and the Interested Parties (IPs) submitted their technical and financial prcposals on the basis of which the Client selected the Financial Advisor;
The Parties represent that this Agreement constitutes binding legal obligations nd the persons signing this agreement are competent and legally authorized
to bind the Parties; and
The Fnancial Advisor represents to the Client that it, along with its sub-contractors, has the required professional skills, personnel, expertise and techni:al resources to provide the Services to perform this Agreement.
NOW THEREFORE, the Parties agree as follows:
1. The forlowing documents attached to this Agreement shall form an integral part of this Agreement:
The General Conditions of this Agreement; The Special Conditions of the Agreemen:; -
Appendices: -.: 01
Appendix A: Terms of Reference or Services; Appendix B: Implementation Schedule; Appendix C: Integrity Pact.
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The General Conditions of the Agreement shall not be changed and any change required in the General Conditions shall be effected through Special Condition of the Agreement.
The mutual rights and obligations of the Client and the Financial Advisor shall be as set forth in the Agreement, in particular:
the Financial Advisor shall carry out the Services in accordance with the provisions of the Agreement; and
the Client shall make payments to the Financial Advisor and sub-contractors in accordance with the provisions of the Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed in their respective names as of the day and year first above written.
For and on behalf of Privatisation Commission
Director Genera' Power ç'n' \s\ Privatisation Commission of Pakistan For and on behalf of
United Bank Limited
Saeediqbal, Group Head - Investment Banking
c; SAMAD NAEEM SVP/Senior Manager, Advisory
Unitri nk Limite
EYFord Rhodes N
(P W/
Zeeshah Hussain Partner & Country Service Line Leader Transaction Advisory Services
Witnesses:
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I. GENERAL CONDITIONS OF THE AGREEMENT
A. GENERAL PROVISIONS
1. Definitions: The terms used in this Agreement shall have the following meanings:
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"Agreement" means the Financial Advisory Services Agreement signed between the Client and the Financial Advisor;
"applicable law" means the laws and any other instruments having the force of law in the Islamic Republic of Pakistan;
(a) "Client" means Privatisation Commission (the "PC") established under section 3 of Privatisation Commission Ordinance, 2000;
"day" means a working day of the Client unless indicated otherwise in SCA;
"effective date" means the date on which this Agreement comes into force and effect pursuant to Clause GCA 9;
"expert" means a key expert, non-key expert, or any other personnel of the Financial Advisor, assigned by the Financial Advisor to perform the Services or any part of Services under the Agreement;
"Federal Government" means the Government of Pakistan;
"Financial Advisor" means the external advisor hired by the Client under the Agreement;
"financial closure" means the execution of an agreement involving sale of a property to the buyer and receipt of sale proceeds by the Client as consideration of the transaction;
"GCA" means these General Conditions of Agreement;
"local currency" means Pakistani Rupees or PKR;
"Party" means the Client or the Financial Advisor, and "Parties" mean both of them;
(1) "sale price" means the price approved by the Client and paid to the Client by the buyer;
"SCA" means the Special Conditions of Agreement by which the GCA may be amended or supplemented but not over-written;
"Services" means the work to be performed by the Financial Advisor pursuant to the Agreement described in Appendix-A;
"sub-contractor" means an entity to whom the Financial Advisor sub-contracts any part of the Services while remaining responsible for timely performance of the Agreement;
"success fee" means the amount to be paid by the Client to the Financial Advisor upon financial closure;
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"third party" means any person or entity other than the Federal Government, the Client, the Financial Advisor or a sub-contractor;
"transaction" means sale of a property to a buyer and receipt of sale proceeds by the Client.
Relationship 2.1. Nothing contained in the Agreement shall be construed as
between the establishing a relationship of master and servant or of principal
Parties and agent as between the Client and the Financial Advisor. The Financial Advisor, subject to the Agreement, has complete charge of the experts and sub-contractors performing the Services and shall be fully responsible for the Services performed by an expert or a sub-contractor in accordance with the terms of reference.
Law Governing 3.1. The Agreement, its meaning and interpretation, and the
Agreement relation between the Parties shall be governed by the applicable law.
Language 4.1. This Agreement has been executed in the language specified in the SCA, which shall be the binding and controlling language for all matters relating to the meaning or interpretation of the Agreement.
Headings 5.1. The headings shall not limit, alter or affect the meaning of this Agreement.
Communications 6.1. Any communication required or permitted to be given or made under the Agreement shall be in writing in the language specified in Clause GCA 4. Any such notice, request or consent shall be deemed to have been given or made when delivered in person to an authorized representative of the Party to whom the communication is addressed, or when sent to such Party at the address specified in the SCA.
6.2. A Party may change its address for notice under the Agreement by giving the other Party notice of such change at the address specified in the SCA.
Authorized 7.1 Any document required or permitted to be executed under this
Representatives Agreement by the Client or the Financial Advisor shall be executed by the individuals in accordance with the SCA.
Corrupt and 8.1 The Client requires compliance with its policy in regard to
Fraudulent corrupt and fraudulent practices. In pursuance of this policy, the
Practices Client: (a) defines, for the purpose of this paragraph, the term
'corrupt and fraudulent practuice' as follows:
"corrupt and fraudulent practice" includes the offering, giving, receiving, or soliciting of anything of value to influence the action of a public official or the supplier or contractor in the procurement process or in contract execution to the detriment of the Client; or misrepresentation of facts in order to influence a procurement process or the execution of a contract, collusive practices among bidders (prior to or after bid
4RAG' submission) designed to establish bid prices at artificial, non-competitive levels and to deprive the Client of the benefits of free and open competition and any request
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for, or solicitation of anything of value by any public official in the course of the exercise of his duty;
may terminate the Agreement if it determines that the Financial Advisor has, directly or through an agent, engaged in a corrupt or fraudulent practice, or any collusive or coercive practice in competing for the Agreement; and
may sanction, including declaring the Financial Advisor ineligible, either indefinitely or for a stated period of time, to be awarded any agreement of the Client if, at any time, it determines that the Financial Advisor has, directly or through an agent, engaged in corrupt or fraudulent practice, or collusive or coercive practice in competing for, or in executing, the Agreement.
B. COMMENCEMENT, COMPLETION, MODIFICATION AND TERMINATION OF
AGREEMENT
9. Effectiveness of 9.1 This Agreement shall come into force and effect on the date
Agreement (the "effective date") of the Client's notice in writing to the Financial Advisor instructing to begin carrying out the Services. This notice shall confirm that the effectiveness conditions, if any, listed in the SCA have been met.
10.Termination of 10.1 If this Agreement has not become effective within such time
Agreement for after the date of signature as specified in the SCA, either Party may,
Failure to by not less than twenty two (22) days written notice to the other
B Party, declare the Agreement to be null and void, and in the event
ecorne of such a declaration by either Party, neither Party shall have any Effective claim against the other Party with respect to the Agreement.
11.Commencement 11.1 The Financial Advisor shall confirm availability of key
of Services experts or professional staff and begin carrying out the Services not later than the number of days after the effective date specified in the SCA.
12.Expiration and 12.1 Unless terminated earlier pursuant to Clause GCA 17, this
Duration of Agreement shall remain valid till such time period as specified in
Agreement SCA.
12.2 The Financial Advisor shall perform the Services within the time set out in the implementation schedule (Appendix-B).
13.Entire 13.1 This Agreement contains all covenants, stipulations and
Agreement provisions agreed by the Parties. No agent or representative of either Party has authority to make, and the Parties shall not be bound by or be liable for, any statement, representation, promise or agreement not set forth in the Agreement.
14.Modifications or 14.1 Any modification or variation of the terms and conditions of
Variations the Agreement, including any modification or variation of the scope of the Services, may only be made by written agreement between the Parties.
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15.Force Majeure
Definition 15.1 For the purposes of Clause CGA 15, "Force Majeure" means an event which is beyond the control of a Party, is not foreseeable, is unavoidable, and makes a Party's performance of its obligations under the Agreement impossible or so impractical as to be considered impossible under the circumstances, and subject to those requirements, includes war, riots, civil disorder, earthquake, fire, explosion, unexpected flood or other unusual adverse weather conditions, strikes, lockouts or other industrial action, confiscation or any other action by a Government agency.
15.2 Force Majeure shall not include (i) any event which is caused by the negligence or intentional action of a Party or such Party's expert, sub-contractor or agent or employee, nor (ii) any event which a diligent Party could reasonably have been expected to both take into account at the time of the conclusion of this Agreement, and avoid or overcome in the carrying out of its obligations under the Agreement.
15.317orce Majeure shall not include insufficiency of funds or failure to make any payment required under the Agreement.
No breach of 15.4 The failure of a Party to fulfill any of its obligations under the Agreement Agreement shall not be considered to be a breach of, or default
under, the Agreement in so far as such inability arises from an event of Force Majeure, provided that the Party affected by such an event has taken all reasonable precautions, due care and reasonable alternative measures, all with the objective of fulfilling the terms and conditions of the Agreement.
C. Measures to 15.5A Party affected by an event of Force Majeure shall continue be Taken to perform its obligations under the Agreement as far as it is
reasonably practical, and shall take all reasonable measures to minimize the consequences of any event of Force Majeure.
15.6A Party affected by an event of Force Majeure shall notify the other Party of such event as soon as possible, and in any case not later than seven (07) days following the occurrence or first occurrence of such event, providing evidence of the nature and cause of such event, and shall similarly give written notice of the restoration of normal conditions as soon as possible and in any case not later than three (03) days following the restoration of normal conditions.
15.7 Any period within which a Party shall, pursuant to this Agreement, complete any action or task, shall be extended for a period equal to the time during which such Party was unable to perform such action as a result of Force Majeure.
15.8 During the period of their inability to perform the Services as a result of an event of Force Majeure, the Financial Advisor, upon instructions from the Client, shall either:
demobilize, in which case the Financial Advisor shall be reimbursed for additional costs they reasonably and necessarily incurred, and, if required by the Client, in reactivating the Services; or
continue with the Services to the extent reasonably possible, in which case the Financial Advisor shall continue to be paid under the terms of the Agreement.
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15.9 In the case of disagreement between the Parties as to the existence or extent of Force Majeure, the matter shall be settled according to Clauses GCA 33 & 34.
16.Suspension 16.1 The Client may, by written notice of suspension to the Financial Advisor, suspend all payments if the Financial Advisor fails to perform any of its obligations under the Agreement, including the carrying out of the Services. The notice of suspension shall: (i) specify the nature of the failure; and (ii) request the Financial Advisor to remedy such failure within a period not exceeding fifteen (15) days after receipt by the Financial Advisor of such notice of suspension.
17.Termination 17.1 A Party may terminate the Agreement as per provisions set out below.
a. By the Client 17.1.1. The Client may terminate this Agreement in case of the occurrence of any of the events specified in paragraphs (a) to (f] of this Clause. In such an occurrence, the Client shall give prior written notice of termination to the Financial Advisor: (i) in case of the events referred to in paragraphs (a) to (e); at least thirty (30) days' written notice; and (ii) at least five (5) days' written notice in case of the event referred to in paragraph (fj.
If the Financial Advisor fails to remedy a failure in the performance of its obligations under the Agreement, as specified in a notice of suspension pursuant to Clause GCA 17.
If the Financial Advisor becomes (or, if the Financial Advisor consists of more than one entity, if any of its members becomes) insolvent or bankrupt or enter into any agreement with their creditors for relief of debt or take advantage of any law for the benefit of debtors or go into liquidation or receivership whether compulsory or voluntary.
If the Financial Advisor fails to comply with any final decision reached as a result of arbitration proceedings pursuant to Clause GCA 34.
If, as the result of Force Majeure, the Financial Advisor is unable to perform a material portion of the Services for a period of not less than thirty (30) days.
If the Client, in its sole discretion and for any reason whatsoever, decides to terminate the Agreement.
(fj If the Financial Advisor fails to confirm availability of Key Experts or professional staff as required under Clause GCA 11.
17.1.2. If the Client determines that the Financial Advisor has engaged in corrupt or fraudulent practice, or collusive, coercive or obstructive practice, in competing for or in executing the Agreement, the Client may, after giving fourteen (14) days written notice to the Financial Advisor, terminate the Agreement.
b. By the 17.1.3. The Financial Adviso inatç/thi Financial Agreement, by not less than thir da itteiinoti€&' Advisor
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to the Client, in case of the occurrence of any of the events specified in paragraphs (a) to (d) of this Clause.
If the Client fails to pay any money due to the Financial Advisor pursuant to the Agreement and not subject to dispute pursuant to Clause GCA 34 within forty-five (45) days after receiving written notice from the Financial Advisor that such payment is overdue.
If, as the result of Force Majeure, the Financial Advisor is unable to perform a material portion of the Services for a period of not less than sixty (60) days.
If the Client fails to comply with any final decision reached as a result of arbitration pursuant to Clause GCA34.
If the Client is in material breach of its obligations pursuant to the Agreement and has not remedied the same within forty-five (45) days.
C. Cessation of 17.1.4. Upon termination of the Agreement pursuant to Rights and Clauses GCA 10 or GCA 17, or upon expiration of this Obligations Agreement pursuant to Clause GCA 12, all rights and
obligations of the Parties under the Agreement shall cease, except: (i) such rights and obligations as may have accrued on the date of termination or expiration; (ii) the obligation of confidentiality set forth in Clause GCA 20; (iii) the Financial Advisor's obligation to permit inspection, copying and auditing of their accounts and records set forth in Clause GCA 24; and (iv) any right which a Party may have under the applicable law.
Cessation of 17.1.5. Upon termination of the Agreement by notice of Services either Party to the other Party pursuant to Clauses GCA 17a
or GCA 17b, the Financial Advisor shall, immediately upon dispatch or receipt of such notice, take all necessary steps to bring the Services to a close in a prompt and orderly manner and shall make every reasonable effort to keep expenditures for this purpose to a minimum.
Payment 17.1.6. Upon termination of the Agreement, the Client shall upon make the following payments to the Financial Advisor: Termination
payment for Services satisfactorily performed prior to the effective date of termination; and
in the case of termination pursuant to paragraphs (d) and (e) of Clause GCA 17.1.1, reimbursement of any reasonable cost incidental to the prompt and orderly termination of the Agreement, including the cost of the return travel of the experts or professional staff.
C. OBLIGATIONS OF THE FINANCIAL ADVISOR.
18. General
a. S 18.1 The Financial Advisor shall perform and carry out the -. Services with all due diligence, efficiency and economy, in
Ir EY accordance with generally accepted professional standards and
* * practices, and shall observe sound management practices. The
RA Financial Advisor shall always act, in respect of any matter relating to the Agreement or to the Services as a faithful adviser to the Client,
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and shall at all times support and safeguard the Client's legitimate interests in any dealings with the third parties.
18.2. The Financial Advisor shall employ and provide such qualified and experienced experts or professional staff and sub-contractors as are required to carry out the Services.
b. Law 18.3. The Financial Advisor shall perform the Services in Applicable to accordance with the Agreement and the applicable law and shall Services take all practicable steps to ensure that its expert, professional staff
and sub-contractor comply with the applicable law.
19. Conflict of 19.1. The Financial Advisor shall hold the Client's interests
Interests paramount, without any consideration for future work, and strictly avoid conflict with other assignments or its own corporate interests.
Prohibition of 19.1.1 The Financial Advisor shall not engage, and shall Conflicting cause its experts, professional staff and sub-contractors not Activities to engage, either directly or indirectly, in any business or
professional activities that would conflict with the activities assigned to them under the Agreement.
Strict Duty to 19.1.2 The Financial Advisor has an obligation and shall Disclose ensure that its experts, professional staff and sub- Conflicting contractors shall have an obligation to disclose any situation Activities of actual or potential conflict that impacts their capacity to
serve the best interest of the Client, or that may reasonably be perceived as having this effect. Failure to disclose said situations may lead to the disqualification of the Financial Advisor or the termination of the Agreement.
20.Confidentiality 20.1 Except with the prior written consent of the Client, the Financial Advisor and its experts, professional staff and sub-contractors shall not, at any time, communicate to any person or entity any confidential information acquired in the course of the Services, nor shall the Financial Advisor, the experts, professional staff and sub-contractors make public the recommendations formulated in the course of, or as a result of, the Services.
21.Liability of the 21.1 Subject to additional provisions, if any, set forth in the SCA,
Financial the Financial Advisor liability under the Agreement shall be
Advisor governed by the applicable law.
22.Reporting 22.1 The Financial Advisor shall submit to the Client the reports,
Obligations documents and information as specified in Appendix-A.
23.Proprietary 23.1 Unless otherwise indicated in the SCA, all reports and
Rights of the relevant data and information such as plans, databases, other
Client in documents and software, supporting records or material compiled or prepared by the Financial Advisor for the Client in the course of
Reports and the Services shall be confidential and become and remain the Records absolute property of the Client.
D. EXPERTS AND SUB-CONTRACTORS
24. Replacement 24.1 Except as the Client may otherwise
of Key Financial Advisor shall not make any chanttI
Experts or professional staff or sub-contractors mentioe ii
g, the pert me4it
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sub- 24.2 Notwithstanding the above, the substitution of a key
contractors expert, professional staff or sub-contractor during Agreement execution may be considered only based on the Financial Advisor written request and due to circumstances outside the reasonable control of the Financial Advisor. In such case, the Financial Advisor shall forthwith provide a replacement acceptable to the Client.
Removal of 25.1 If the Client finds that any of the expert, professional staff
Experts or or sub-contractor has committed misconduct or has been
Sub- charged with having committed an offence, or an expert, professional staff or sub-contractor has engaged in corrupt or
contractors fraudulent practice, or collusive, coercive or obstructive practice while performing the Services, the Financial Advisor shall, at the Client's written request, provide a replacement.
25.2 In the event that any of the expert, professional staff or sub-contractor is found by the Client to be incompetent or incapable in discharging assigned duties, the Client, specifying the grounds therefore, may request the Financial Advisor to provide a replacement.
25.3 Any replacement of the removed expert, professional staff or sub-contractor shall possess equal or better qualifications and experience and is acceptable to the Client.
25.4 The Financial Advisor shall bear all costs arising out of or incidental to any removal and/or replacement of an expertor, professional staff or sub-contractor.
E. OBLIGATIONS OF THE CLIENT
Assistance 26.1 Unless otherwise specified in the SCA, the Client shall use
and its best efforts to:
Exemptions (a) assist the Financial Advisor by providing requisite information or documents as are necessary to enable the Financial Advisor to perform the Services.
(b) provide to the Financial Advisor any other assistance as is specified in the SCA.
Payment 27.1 In consideration of the Services performed by the Financial
Obligation Advisor under this Agreement, the Client shall make such payments to the Financial Advisor for the deliverables as specified in SCA.
F. PAYMENTS TO THE FINANCIAL ADVISOR
Agreement 28.1 The Agreement price is fixed and is set forth in the SCA.
Price 28.2 Any change to the Agreement price specified in Clause 31 can be made only if the Parties have agreed to the revised scope of Services pursuant to Clause GCA 14 and have amended in writing the Terms of Reference in Appendix A.
Taxes and 29.1 The Financial Advisor is responsible f eeting the tax
Duties liabilities arising out of the Agreement.
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Currency of 30.1 Any payment under the Agreement shall be made in the
Payment currency specified in SCA.
Mode of 31.1 The total payments under this Agreement shall not exceed
Billing and the Agreement price set forth in Clause GCA 28.1.
Payment 31.2 The payments under this Agreement shall be made in the following manner:
lump-sum payment shall be paid against deliverables as per implementation schedule comprising remuneration;
out of pocket expenses shall be paid on lump-sum basis against deliverables along with remuneration or as per actual expenses (within the limit fixed in SCA) against receipts or bills specified in the SCA; and
success fee shall be paid upon successful financial closure of the transaction.
3 1.2.1 The Financial Advisor shall perform the tasks and complete the milestones within the time frame mentioned in the implementation schedule. The Client shall verify the deliverable and convey its approval within the period specified in SCA.
3 1.2.2 On receipt of approval of deliverable from the Client, the Financial Advisor shall submit invoice against the approved deliverable and the Client shall make payment within thirty (30) days of receipt of the invoice.
31.2.3 In case there is a delay in verification of the deliverable by the Client due to the reasons conveyed in writing to the Financial Advisor, the Client shall make a part payment against the deliverable as specified in SCA. In any eventuality, the verification of a deliverable by the Client shall not exceed forty five (45) days.
31.2.4 If a deliverable is found unsatisfactory, the Client shall convey its observations with remedial measures to the Financial Advisor. The Client shall ensure that all of its observations on the deliverable are conveyed to the Financial Advisor in a consolidated form and not in a piecemeal manner. The Financial Advisor shall, within the period specified in SCA, submit the revised deliverable to the Client.
3 1.2.5 The Financial Advisor shall verify a deliverable submitted by a sub-contractor before submission to the Client. In case of any payment required under SCA to be made directly to sub-contractor, the Financial Advisor shall verify the invoice of the sub-contractor before submission to the Client.
31.2.6 All payments under the Agreement shall be made to the accounts of the Financial Advisor or a sub-contractor as specified in the SCA.
JEY "
31.2.7 With the exception of the final payment under Clause GCA 31.2.2 above, payments do not constitute acceptance of the whole Services nor relieve the Financial Advisor of any obligations under the Agreement.
G. FAIRNESS AND GOOD FAITH
32.Good Faith 32.1 The Parties undertake to act in good faith with respect to each other's rights under the Agreement and to adopt all
13
reasonable measures to ensure the realization of the objectives of the Agreement.
H. SETTLEMENT OF DISPUTES
33.Amicable 33.1 The Parties shall seek to resolve any dispute amicably by
Settlement mutual consultation.
33.2 If either Party objects to any action or inaction of the other Party, the objecting Party may serve a written notice of dispute to the other Party providing in detail the dispute and the basis of the dispute. The Party receiving the notice of dispute will consider it and respond in writing within fourteen (14) days after its receipt. If the other Party fails to respond within fourteen (14) days, or the dispute cannot be amicably settled within fourteen (14) days following the response of the other Party, Clause GCA 34 shall apply for resolution of dispute.
34Dispute 34.1 Any dispute between the Parties arising under or related
Resolution to the Agreement that cannot be settled amicably may be referred to by either Party to arbitration in accordance with the Arbitration Rules of the London Court of International Arbitration through appointment of three arbitrators under those rules. Each Party shall appoint one arbitrator while the Parties shall jointly appoint the third arbitrator who shall act as presiding arbitrator. In case of dispute on the appointment of third arbitrator, any Party may submit an application to the Chief Justice of Islamabad High Court for appointment of the third arbitrator and decision of the Chief Justice shall be final and binding on the Parties.
34.2 The arbitration shall take place in Islamabad and the language of the arbitration proceedings shall be English. The award shall be final and binding on the Parties.
34.3 The Parties agree that the Courts at Islamabad shall have exclusive jurisdiction with respect to the enforcement of an award or any litigation relating to or arising out of the Agreement.
34.4 In case of conflict between the provisions of the Aribitration Rules of the London Court of International Arbitration and the Arbitration Act 1940, the Court in Islamabad shall apply the Arbitration Rules of the London Court of International Arbitration relating to arbitration proceedings and for enforcement of the award.
35.Indemnifi cation I. MISCELLANEOUS
35.1 The Financial Adviser shall indemnify, protect and defend at Financial Adviser's own expense, the Client, its Chairman, Secretary, members, consultants, officers and employees, from and against any and all actions, claims, losses, damages or liabilities of a third party arising out of any act by the Financial Adviser, its expert or professional staff, sub-contractor or employee to the extent that such fault is finally determined by a court or arbitral tribunal to have resulted from any act of the Financial Adviser, its expert or professional staff, sub-contractor or employee.
35.2 If any action, suit, proceeding or investigation is commenced, as to which the Client propose to demand indemnification, the Client shall not, without the prior written consent of the Financial Adviser, settle or compromise any claim,
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or permit a default or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent includes, as an unconditional term thereof, the giving by the claimant to the Financial Adviser of an unconditional and irrevocable release from all liability in respect of such claim. To the extent of any settlement, compromise or consent which requires payment to be made by the Client to the claimant, the Financial Adviser's liability hereunder shall continue to subsist.
35.3 The Financial Adviser shall, at its own cost and expense, upon request of the Commission, re-perform the Services in the event of Financial Adviser's failure to exercise the skill and care required under the Agreement.
35.4 The Client undertakes to keep the Financial Adviser, its expert or professional staff, sub-contractor or employee indemnified from and against any losses, claims, damages or liabilities of a third party related to, arising out of any act by the Client to the extent that such fault is finally determined by a court or arbitral tribunal to have resulted from any act of the Client, its consultant or employee.
35.5 The Financial Adviser's or Client's aggregate civil liability
36.Insurance to each other under this Agreement shall not exceed the total agreement price (inclusive of remuneration fees, out of pocket expenses and success fee) fixed under the Agreement.
36.1 The Financial Adviser shall take out and maintain adequate professional liability insurance as well as adequate insurance against third party liability and loss of or damage to equipment.
36.2 The Client undertakes no responsibility in respect of any life, health, accident, travel and other insurance, which may be necessary or desirable for the personnel of the Financial Adviser,
37.Integrity Pact including experts and sub-contractors, nor for any members of any family of any such person.
38.Severability 37.1 The Parties are bound by the Integrity Pact (Appendix-C) and acknowledge the terms and conditions of the Pact.
38.1 If any provision of the Agreement is rendered invalid or unenforceable then: (i) to the fullest extent permitted by the applicable law, the other provisions of the Agreement shall remain in full force and effect and the Parties agree to carry out the agreements contained herein to give effect as near as possible to the original intention of the invalid or unenforceable provision; and (ii) the invalidity or unenforceability of any provisions of the Agreement shall not affect the validity o ability of such provision in any other jurisdiction. "co
Q. -
15
IL SPECIAL CONDITIONS OF THE AGREEMENT
Number Amendments of, and Supplements to, Clauses in the General Conditions of of GC Agreement
Clause
1.1(b) The agreement shall be construed in accordance with the law of the Islamic Republic and 3.1 of Pakistan.
4.1 The language is:English.
6.1 and The addresses are: 6.2
Client: Privatisation Commission, Government of Pakistan
Attention:
Address: 4th Floor, Kohisar Block, New Pak Secretariat, Constitution Avenue, Islamabad, Pakistan.
Telephone: +92(51) - 9208510 Fax: +92(51)-9203076
Email: [email protected]
FA:
United Bank Limited
Attention: Mr. Saeed Iqbal Address: 4th Floor South Wing, Investment Banking Group, UBL Head Office II Chundrigar Road, Karachi
Telephone: + +92 21 3241 0043 Email: [email protected]
EY Ford Rhodes Attention: Mr. Zeeshan Hussain Address: EY Ford Rhodes, 615, 61h Floor, Progressive Plaza, Beaumont Road, Karachi Telephone: +92(21) - 35219021 Email: [email protected]
7.1 The Authorized Representatives are:
For the Client: Muhammad Jamil Director General (Power) Privatisation Commission 4th Floor, Kohisar Block, New Pak Secretariat, Constitution Avenue, Islamabad, Pakistan. Telephone: +92(5 1)- 9208510 Fax: +92(5 1)- 9203076 email: dgpowerprivatisation.gov.pk
For the Financial Advisor:
° Ey r Mr. Saeed Iqbal Group Head - Investment Banking 0-4
EY: Mr. Zeeshan Hussain
2
Sr. % of PKR Amount
Deliverable Retainer No. fee
Approval of comprehensive legal, 1 financial, HR and technical due 30% 27,586,598
diligence report etc.
2 Approval of Transaction Structure
20% and Privatisation Plan 18,391,065 Approval of marketing and advertisement documents (such as IM/ presentations) and 9,195,533 evaluation of Statement Of
10%
Qualifications of pre-qualified investors. Drafting and approval of bidding
6 documents and approval of 10% 9,195,533 reserve price. Completion of bidding process including 18,391,065
7 Approvals and signing of sale 20% agreement with successful bidder(s).
8 Financial closure and submission
10/o 0 of 9,195,532
EY
Ei
Country Leader & Partner, Transaction Advisory Services
9.1 1 The Agreement shall come into force and effective after signing by both the Parties.
10.1 Termination of Agreement for Failure to Become Effective:
The time period shall be 60 days.
11.1I Commencement of Services:
Services will be commenced within fifteen (15) days after signing of the Agreement.
12.1 1 Expiration and Duration of Agreement:
The Agreement is valid for initial period of eighteen (18) months unless extended in writing with mutual consent of the Parties.
28.1, The Agreement price is: Pak Rupees (Ninety One Million Nine Hundred and Fifity 29.1 Five Thousand Three Hudred and Twenty Six Rupees Only for remuneration/retainer
fee (PKR 91,955,326/-), out of pocket expenses (Pak Rupees Twenty Million Seven Hundred and Fifty One Thousand Five Hundred and thiry Rupees Only PKR 20,751,530) and success fee at 0.3 1% of Sale Price and is inclusive of all relevant taxes). It is clarified that the Financial Advisor shall be permitted to provide breakdown in its respective invoice(s) (including out of pocket expenses) to account for Sindh Sales Tax or any other provincial or federal taxes that are attributable to its services provided that the total payment obligation of the the Client does not exceed the Agreement price which shall be inclusive of taxes.
30.1 1 Payment shall be made to the Financial Advisor in Pak Rupees (PKR).
The Payment Schedule:
27.1 I i. The Client shall make payment against the deliverables as per following & schedule: 31.2
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original documents/materials of transaction to Client.
The Financial Advisor shall account for all remuneration and out of pocket expenses associated with successful accomplishment of the transaction process and the Client shall not assume responsibility of incurring additional cost on any of the activity.
Out of Pocket Expenses:
The out-of-pocket expenses shall be capped at PKR 20,751,530 shall consist of following, where relevant, and be reasonably incurred by any of the Financial Advisor and its sub-contractor(s) in the performance of the Services:
o Hotel and subsistence costs actually incurred and based on corporate rates including cost of Telephone and faxes;
o Costs and expenses related to marketing, local and international advertisements in relation to publishing of the Expression of Interest or other information in newspapers and local and international roadshows (if required) as set forth in Appendix A;
o The cost of domestic transportation of the personnel (by business class maximum) by the most appropriate means of transport. In case of transportation via personal vehicle, the cost shall be determined on the basis of total distance travelled for each round trip at the rate of PKR 30/km; and
o Miscellanous travel expenses such as the cost of the transportation to and from Airports, Taxes, Passports, visas, travel permits, vaccination.
o Other miscellaneous expenses including but not limited to the cost of data room for managing investor due diligence, cost of printing, preparing, reproducing and shipping of the documents, reports, etc. related to the Transaction.
o cost of items not covered in the foregoing but which may be required by the Financial Advisor for completion of the Services, subject to the authorization of the Commission.
All payments under this Agreement shall be made to the invoicing party namely; each of the Financial Adviser or the Sub-Contractors approved under Section 24.
The out-of-pocket expenses shall be invoiced by the Financial Advisor on monthly basis. All invoices for out-of-pocket expenses shall, other than in the case of expenses relating to telephone and faxes, be accompanied by original receipts and supporting documents such as ticket stubs for air travel, and courier receipts or written confirmation from vendor that the expenses are true and accurate. It is clarified that the Client will not be in a position to make >-'< payments for out-of-pocket expenses if the party submitting the claim fails to
the necessary supporting documents in original. The Client however provide agrees that, in case originals of invoices are lost or misplaced then an affidavit -
from respective party stating that the invoice is representative of the costs incurred is acceptable.
j 0rd General Terms: Ac0
EY
4
V. In case of termination or suspension of this Agreement, the Financial Advi f)
EY shall raise an invoice for all services and deliverables performed under t
Co
Agreement, including out-of-pocket expenses that shall incurred prior to the date of such termination or suspension as the case may be.
Fq
All invoices for remuneration, fees or out-of-pocket expenses shall be paid by the Client within thirty (30) days of receipt of such invoices raised by the Financial Advisor.
All payments under this Agreement shall be made to the invoicing party namely; each of the Financial Adviser or the Sub-Contractors approved under Section 24.
31.2.1, Approval of Deliverables: 31.2.2, 3 1.2.3 (i) The Client shall convey its provisional approval of deliverables within twenty (20)
working days of submission of the deliverable, confirming that the contents of the relevant deliverables are in accordance with the requirements of Appendix-A read together with the technical proposal submitted to the Client and such provisional approval shall not be unreasonably delayed or withheld.
The Client shall convey its observations with remedial measures to the Financial Advisor on a deliverable within twenty (20) working days of submission of the deliverable.
The Financial Advisor shall submit the revised deliverable to the Client addressing the points raised by the Client within fifteen (15) working days after receipt of observations from the Client pursuant to sub-clause (ii) above.
Invoicing & Payment of Deliverables:
The Financial Advisor shall invoice for 50% of the retainer fee applicable to the relevant deliverable upon provisional approval by the Client under sub-clause (i) above, and payment against such invoice shall be made upon the earlier to occur of: (A) the expiry of the time period referred to in sub-clause (i) and (B) thirty (30) days of receipt of such invoice.
The Financial Advisor shall invoice for the balance 50% of the retainer fee applicable to the relevant deliverable upon the earlier to occur of: (A) the expiry of the time period referred to in sub-clause (ii) above; and (B) the date the Financial Advisor submits the revised deliverable to the Client pursuant to sub-clause (iii) above, and payment against such invoice shall be made within thirty (30) days of receipt of such invoice.
3 1.2.6 1 The accounts are:
for local currency:
for local currency:
FINANCIAL ADVISORS
United Bank Limited Head Office, Karachi Account No. 211129565 Branch Code: 0999
7
1p
EY
EY Ford Rhodes EY Ford Rhodes Account No. 01-1309404-01 Standard Chartered Bank Pakistan Main Branch Ibrahim Ismail Chundrigar Road, Karachi, Pakistan
19
Bank Branch code. 71 IBAN. PK87SCBL000000 1130940401 Swift Code SCBLPKKX
SUB-CONTRACTORS
NESPAK PVT. LTD Account No. 0010001924780046 Allied Bank Limited Faisal Town Lahore Branch Vode 0717 IBAN No: PK90 ABPA 0010 0019 2478 0046
Haidermota & Co. Bank Name: MCB Bank Limited Branch: DHA 26th Street Bank Address: 42-C, 26th Street DHA Phase V, Karachi, Pakistan Branch Code: 8029 Account No.: 0000000009323988- Current Account Account Title: HAIDERMOTA AND COMPANY IBAN Number: PK40MUCB0000000009323988 Swift Code: MUCBPKKA
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APPENDIX-A
TERMS OF REFERENCE (TORs)
COMBINED CYCLE POWER PLANT (CCPP) NANDIPUR 425 - 525 MW OF THE NORTHERN POWER GENERATION COMPANY LIMITED (NPGCL)
Background
The Government of Pakistan (GOP) is implementing a comprehensive reform and restructuring program in the Power Sector, including privatisation to achieve the following broad objectives:
Enhance Capital Formation for Power Sector outside the GOP budget and without Sovereign Guarantees; Improve Power Sector efficiency through competition, managerial autonomy & profit incentives; and
C. Maximize the Sales Proceeds from privatisation process.
The regulation of the power sector is being governed by the Generation, Transmission & Distribution of Electric Power Act i.e. (NEPRA Act), which was approved by Parliament in 1997. Previously, the Electricity Act, 1910 provided the legal framework for the Power Sector in Pakistan. National Electric Power Regulatory Authority (NEPRA) was constituted under the NEPRA Act as an independent Regulatory Authority for regulating the provisions of electric power services. It is exclusively empowered to regulate generation, transmission and distribution of electric power in Pakistan and to determine rates, charges and other terms and conditions for provision of electric power services.
2. 425 MW CCPP Nandipur Power Plant (NPP)
The Nandipur Power Plant is a 425 MW combined cycle thermal power plant situated at Nandipur near Gujranwala in the Punjab province of Pakistan. Being constructed by the China Dongfang Electric Corporation, the project was completed in March 2015. The power plant faced some of hiccups during and after launching its commercial operations. In order to make the project viable and to reduce annual losses, it was decided to convert the plant to RLNG in 2017.
Even after becoming operational, the Nandipur Power Project produced unsustainable levels of per-unit power, with average capacity of around 40% utilisation. Now adequate LNG is available in the country. Therefore, in late 2016, the Economic Coordination Committee (ECC) finally approved a loan of Rs 30.6 bn to convert Nandipur to gas operation. On April 23, 2017, Nandipur started a 525 MW test run on regasified liquefied natural gas (RLNG) with 30 MMcfd of gas supply from Sui Northern Gas Pipelines limited (SNGPL). Along with conversion to RLNG, an operation and maintenance (O&M) contract was signed for 10 years between Northern Power Generation Company Limited (NPGCL) and the Hydro Electric Power System Engineering Company (HEPSEC) of China. Despite its production costs and other factors, the plant produced 460 MW - 480 MW with its four turbines operating on gas and another one on steam.
f)
3. Objective kif
- The main task of the Financial Advisor is to advise on the privatisation of NPP, o° EY carry out the sale keeping the interests of the GOP paramount. It is expected th' Financial Advisor shall have the ability to conduct sale of power plant, to maximize the sales proceeds for the GOP. The advisory services include but are not limited to (i) conduct a holistic review of legal & regulatory framework / affairs of NPP; (ii) detailed due diligence and review of NPP operations (physical, financial,
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4RAC
technical, environmental, legal, regulatory and institutional etc.); (iii) Privatisation Plan, mode, divestment options, restructuring or carve out of assets and an appropriate transaction structure; (iv) preparation & implementation of marketing plan; road shows to generate maximum investor's interest (v) pre-qualification of prospective investors (vi) valuation & proposed reference price (vii) preparation of biding documents (viii) biding process & post bid evaluation (ix) and all ancillary actions for successful closure of the transaction.
Scope of Work
The Financial Advisor is expected to take over all responsibility of the assignment / project. This section is designed to identify some of the activities that the GOP feels need to be mentioned here and should not in any way be construed as the complete set of activities required under any contract resulting from this TOR. Although the GOP has substantial experience in privatisation of public sector enterprises, the interested parties (IPs) are required to provide proposals that are not only compliant to the requirements of this section but also demonstrate IPs understanding of the overall scope of work. The scope of work for the Financial Advisor can be broadly divided into two phases i.e. Phase-I: Preparation of the Transaction; and Phase-Il: Implementation of the Privatisation Plan and Closure. It should be noted that summary of advisory services scope of work includes but are not limited to:
The Financial Advisor is expected to conduct a holistic review of power facilities, electricity laws and by-laws. A review and analysis of the NPP's legal & regulatory framework i.e. security package (Power Purchase Agreement (PPA), Gas Supply Agreement (GSA), Implementation Agreement (IA), Tariff Determinations, Loan Agreements and all other ancillary agreements / contracts etc.) with respect to sale of NPP is also needed to identify the gaps;
Conduct detailed due diligence and review of NPP operations (physical, financial, technical, legal, regulatory, institutional and environmental etc.). The Financial advisor will review all concerned legislation, contractual obligations and liabilities that have impact on successful completion of the transaction;
The Financial Advisor will provide recommendations to address issues pertaining to the restructuring (financial, legal & operational), if required for de-merger or carve out of power facility's assets from NPGCL. Financial Adviser will advise on structuring the deal keeping in view the financial & legal parameters, so as to optimize the prospective returns / sales proceeds from the transaction for the GOP;
The Financial advisor will assist the GOP in preparation of financial restructuring, assets carve out, balance sheet optimization, statutes and other legal & regulatory arrangements needed for the sale of NPP / power facilities;
As a part of the privatisation process the Financial Advisor will assist the GOP in developing and implementing a clear and workable plan for employees to ensure that the rights of employees will not be compromised;
Review the present operational conditions, analysis it
nE~~A,
h the applicable environment standards and provide r on measures required to meet applicable regulations & erat maximum investor's interest in the transaction;
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The Financial Advisor will advise on divestment options the pros and cons of various modes and recommend optimal & appropriate transaction structure to maximize the returns and sale proceeds for the GOP;
Implementation of the transaction structure for sale / divestment;
Preparation and implementation of the comprehensive marketing plan. The Financial Advisor will be expected to develop a focused promotional campaign; preparation of short press briefings for national and international publications to generate interest, organize seminars, road shows local and international for potential investors;
The Financial Advisor shall be required to advise plausible measures that can attract maximum interest of prospective domestic and international investors to bring private capital and expertise for the transaction;
Pre-qualification of prospective investors, managing pre-bid and final biding process, preparation of biding documents, valuation & proposed reference price, post bid evaluation and successful close of transaction;
The Financial Advisor will provide justification and calculations used as well as a detailed explanation for the methodology used in arriving at specific recommendations;
Financial Advisor will identify all the consents & approvals that will be required from the GOP and its entities to carry out the transaction under the legal, regulatory framework. FA will advise / explain the requisite & statutory procedures for obtaining such consents / approvals, and provide appropriate assistance to expedite the approval process;
The Financial Advisor will draft all the necessary documents, minutes of the meetings, petitions, working papers, presentations and clear recommendations to assist the GOP to obtain such consents & approvals for the successful closure.
The broad detail of the tasks to be included in each phase but not be limited to is given as hereunder:
4.1 Phase-I: Preparation of the Transaction
4.1.1 Review of Related Works
The Financial Advisor will thoroughly review, evaluate, comment and update on work related to the privatisation of NPP keeping in view the legal & regulatory environment i.e. requirements by the NEPRA, SECP, PPIB and Power Division etc.
4.1.2 Due Diligence
As part of this activity, the Financial Advisor is expected to review in a comprehensive manner the technical, operational, accounting, financial, legal & regulatory, contractual, environmental and employee related aspects of NPP. The purpose of due diligence is to identify issues and considerations in each of below mentioned areas that need to be taken into account by the Privatisation Commission and other entities of the GOP that are material to affect the sale process. The issues thus identified will then be addressed in the privatisation &Mi repared
Ac subsequently by the Financial Advisor in order to imple ei1 ation successfully. The management of NPP would be available sie Ti ncial Advisor in conducting the due-diligence including but not Ii jedEhe fi wing\ areas:
4RAc 2
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Li Legal: Review and comments on legal & regulatory framework, contractual obligations and NPP's entire security package i.e. ancillary agreements / contracts with the objective NPP's sale to private sector under IPP mode. Advise on legal and contractual obligations and providing disclosure to potential investors, with the GOP's approval;
zi Technical: Conduct due diligence on NPP's power facilities, assets and other operations including, sale of energy to CPPA, staffing levels and environmental performance with a view to determine the asset evaluation of NPP. Identify the issues if any related to power plants for the consideration of the GOP. It is emphasized that comprehensive analysis & assessment of investments made for the disclosure to the potential investors;
ci Financial: Review and examine the audited financial statements, management accounts and the financial structure; assistance in preparation of financial statements of the NPP;
u Regulatory: Review and comment on the regulatory framework, market structure and the tariff setting mechanism developed by NEPRA and evaluate the effects on the transaction, proposing appropriate recommendations; and
j Environmental Assessment: Review and comment on the environmental assessment where power facilities are operating; evaluate the effects on the transaction; and provide appropriate recommendations.
4.1.3 Financial Restructuring
Review of the Financial Statements ancillary accounts of the NPP along with records of previous periods audited financial statements by the independent external auditors. The Financial Advisor is expected to review these audited financial statements and comment upon their adequacy keeping in view the assets base of NPP. The Financial Advisor will be required to prepare detailed financial restructuring options, taking into consideration the major lenders guidelines / covenants. Wherever, loan guarantees, lenders' consents or GOP approvals are involved, the Financial Advisor with the help of its legal team members will identify the necessary consents and procedures required, draft the necessary documents to obtain such consents, and assist the GOP to obtain the necessary consents & approvals.
4.1.4 Tariff Methodology
The Financial Advisor will review the existing tariff structure and methodology, identify the shortcomings of the current tariff from the point of view of the privatisation of NPP. The Financial Advisor will be expected to provide full assistance to management of NPP for filing of tariff petitions and review motions for tariff related matters; if required.
4.1.5 Financial and Valuation Model
Based on the due-diligence review and the necessary input received from GOP and NPP. The Financial Advisor will prepare a comprehensive Financial and Valuation Model to evaluate NPP as an operating concern, keeping in view the potential growth, recommended tariffs and future earnings, and other business considerations valuation of land/property assets etc. The most prudent and relevant valuation techniques will be used to assess the value of the power plants. The Financial and Valuation Model will be used to undertake a sensitivity analysis, and to highlight the impact of changes in different variables, such as tariff levels and debt equity ratio on the overall value of the assets to be privatised. The Financ: - • sor will be required to provide details of all assumptions, reasoning an d to i' arrive at specific recommendations. The assumptions and pa niiie the basis of the model and final valuation should be discussed jth y.coce ed
*
E 24
stakeholders in order to avoid any disagreement over the outcome of the model at the final stages.
4.1.6 Legal and Regulatory framework
The Financial Advisor will identify and review the legal and regulatory issues in connection with the transaction and provide recommendations to deal with such issues in consultation with NEPRA and other relevant agencies. The Financial Advisor is expected to describe and assess the current policy, legislative and regulatory framework for the power sector and the progress made in its restructuring. Identify the issues that potentially affect on the success of the privatisation of NPP by international tender.
4.1.7 Market Structure
The Financial Advisor is expected to advise whether a comprehensive legal and regulatory mechanism & framework is in place having adequate procedures for essential support for success of the privatisation.
Besides focusing on marketing to prospective investors and considering the sensitivity and socio economic aspect of the transaction, FA will also delineate a public awareness plan through effective usage of various media channels / forms. Effective print and electronic media campaign is envisaged to focus on highlighting and projecting the benefits of the transaction.
4.1.8 Manpower Issues
Review the existing manpower position to formulate a manpower-restructuring plan and staff retrenchment strategy, if required, for making the transaction feasible, providing an analysis of options and costs involved, for discussion and review by the Privatisation Commission, and final determination by the GOP. FA will advise on any material issues affecting NPGCL's workforce in the transaction. Preparation of Golden Handshake Scheme (GHS), Voluntary Separation Scheme (VSS) and taxation related issues etc. for the successful completion of NPP.
4.1.9 Privatisation Plan
The Financial Advisor is expected to identify issues, options and strategies for the transaction along with benefits and costs and to make a clear recommendation to the GOP on the most preferred course of action for the privatisation of NPP. It is expected that the transaction structure would inter alia include: (a) detailed structure of the transaction; (b) timing of the privatisation and likely sales proceeds; (c) target investor profile; (d) implementation plan and schedule of activities; and (e) other related aspects.
The development of the privatisation plan and the detailed restructuring, optimal transaction structure would signify the completion of Phase-I of the Financial Advisor's assignment. Upon the completion of this phase, the refined strategic plan and recommended transaction structure would be considered for approval. The Financial Advisor is expected to prepare / make the necessary presentations for facilitating such approvals for the Privatisation Commission and GOP.
4.2 Phase-Il: Implementation of the Privatisation Plan and Closure
4.2.1 Valuation N.
Based on the approval of the recommended transaction structl the Financial Advisor will be expected to finalize the valuation ohbu4sets / enterprise value etc. under the approved transaction structur4id mpios.
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The FA shall be expected to present the valuation model to explain and discuss the underlying assumptions and workings at various forums within the Government to obtain the approval.
The objective is to apply various internationally accepted valuation techniques to obtain a valuation for NPP. FA will be required to carryout valuation utilizing asset valuation methodology, book value multiples, price to earnings method together with the DCF valuation methodology. Sensitivity analysis will also be carried out in order to highlight the impact of changes in different variables. The valuation models will take into account the capital expenditure and earnings projections, costs and other business considerations.
4.2.2 Marketing
The Financial Advisor will work with the Privatisation Commission and management of the NPP to develop and implement a marketing strategy. In this respect Road Shows may be conducted at suitable locations local and international to highlight the strengths of the power plant / facilities, potential opportunities and the foreign investment climate in Pakistan. The Financial Advisor will be expected to do this as an ongoing parallel activity throughout its involvement on the project. The Financial Advisor will be required to identify the suitable locations / destinations in abroad to conduct Road Shows to fetch maximum interest from the international investors.
The Financial Advisor will be required to be present and participate in discussions with potential investors from time to time, as determined by the Privatisation Commission. The Financial Advisor will develop and assist in the implementation of a plan for introducing the transaction and projecting its image through various media at home and abroad to enhance the value and to expand the interest of the strategic investors in the transaction.
4.2.3 Expressions of Interest and Pre-qualification
The Financial Advisor will be required to conduct the process of solicitation of Expressions of Interest (EOI) and Pre-qualification of potential bidders for the sale of power facility strictly in line with applicable Laws of Pakistan. In this regard, the preliminary Information Memorandum and Pre-qualification criteria would be developed for the approval of Privatisation Commission, and information widely disseminated among interested parties to foster a competitive process.
4.2.4 Information Memorandum (TM) and Pre-qualification / Bidding Documents
The Financial Advisor will be responsible for the finalization of necessary documentations such as Information Memorandum; evaluation criteria for the bidders; pre-qualification of bidders; and preparation of bidding document package, including technical evaluation and legal documentation (including sale, management control and implementation agreements, etc.). The Financial Advisor will work closely with its consortium member firms and prepare biding documents for the short listed bidders. The Financial Advisor will ensure that all documents are prepared in accordance with local and international disclosure requirements and should meet good business practice norms for the GOP.
4.2.5 Bidding Process Itii 1
Financial Advisor will manage the entire bidding process, on behalf of the Privatisation Commission, including but not limited to, pre-bid conference(s), facilitation of bidder's due diligence, bidding documents, solicita ds, bid opening and evaluation, recommendations on award, post jeNL n
activities, and ancillary work etc. The FA will provide a det lejbri t the -'' ) bidders with respect to the transaction documents, bidding p c&ssEt1 tl st- close issues. *
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4.2.6 Closure
Financial Advisor will present the Investors bids to the GOP for approval and assist in conducting negotiations with the qualified investors, and arrange financial closure of the deal. Financial Advisor will also arrange compliance with the terms of sale including transfer by the successful buyer of sale proceeds to GOP nominated accounts. The Financial Advisor will oversee the eventual transfer, through the completion of all post-sale legal formalities i.e. condition precedents (CPs) meticulously in line with all applicable laws of Pakistan.
Proposed Methodology
The Financial Advisory Consortium will engage and mobilize a multidisciplinary team of experts (consortium), as necessary, with the approval of the Privatisation Commission with skills and experience in all aspects, including but not limited to the following such as: corporate restructuring or asset carve out and privatising of Power plant, financial restructuring, power system operations and management, labor and human resources planning and issues, legal & regulatory review / analysis and technical and financial due diligence. The Financial Advisor will oversee, guide, coordinate, and integrate the work of all other members of the consortium (i.e. accounting, legal, regulatory, technical, environmental and public relations etc.) and liaise with relevant entities and officials of the Government of Pakistan, Power Division, Petroleum Division, Provincial Government in which the entity is operating, Privatisation Commission, NEPRA, SECP, CCP, SPB, PPIB and NTDC / CPPA etc. The Financial Advisor will be the single point of contact for the Privatisation Commission.
The Financial Advisor will commence the work with a kick off meeting at Privatisation Commission, followed by the First Review Meeting within one week after the commencement of the work. The objective of the Review Meeting would be to apprise the key persons of the Privatisation Commission and GOP of the overall plan of the activities proposed by the Financial Advisor to form a base line, especially for those who will not read the proposals in detail but who are likely to play major roles in the decisions-making. Essentially, this meeting would cover the following:
Schedule of activities leading to the privatisation of NPP, including all major milestone activities phase I and II; Review of the team organization and the detailed functions of the individual members of the Financial Advisory Consortium; Schedule of meetings, reviews, presentations and the objectives for each: Deliverables and Delivery Schedules; Interface Requirements with various departments of GOP; Any specific issues requiring attention of GOP on an immediate basis; and Other project activities requiring discussions in order to establish a baseline for future activities.
Under no circumstances would the object of the First Review meeting be to redefine the scope of work committed in the Contract Agreement. In case of inconsistencies between the Contract Agreement and the presentation of the First Review Meeting, the former will rule unless specifically, and in writing, agreed otherwise.
6. Project Management
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The Privatisation Commission will assign senior staff members to liaise with Financial Advisor and its consortium members to coordinate in relation to se ()
appointments for meetings with GOP Ministries, Divisions, Departmc Organizations and Regulatory Bodies etc.
A Transaction Committee, constituted by the Privatisation Commission Board will be established to oversee the privatisation and performance of Financial Advisor
27
along with representations inter-alia from Ministry of Finance, Ministry of Energy, Power Division, Privatisation Commission and its Board Members. The Committee will play a key role in reviewing and monitoring the progress of the transaction.
7 Deliverables
The following is an indicative list of deliverables, which the Financial Advisor is expected to provide.
Detailed Implementation Schedule
A detailed implementation schedule will be prepared immediately and presented at the First Review Meeting. The Financial Advisor should develop the Schedule after the completion of the review of all relevant documents.
Due-Diligence Reports
The Due-Diligence Reports to include an analysis of technical, operation, financial, tariff, legal & regulatory and restructuring issues related to the transaction clearly identifying what still needs to be done to bring the transaction to the market and successful closure.
Privatisation Plan
The Privatisation Plan identifying issues, options and strategies for the transaction along with costs benefit and making a clear recommendation to the GOP on the most preferred course of action for the privatisation of NPP. The plan shall be prepared drawing together the results of the due diligence, discussions with key government officials and other objective conditions related to the power market environment.
Information Memorandum
The Information Memorandum will describe the operations, financial position and the transaction structure of NPP. The Information Memorandum should be available as early as possible and the transaction strategy by the GOP for making it available to the interested investors after pre-qualification process.
Valuation
Valuation report based on the output of the Financial and Valuation Model and international comparisons should be prepared prior to the bid date for the approval of the GOP.
Monthly Status Reports
Monthly Status Reports will be submitted describing the status of implementation of the relevant milestone activities. Where there is delay or potential delay in the Proj ect, the Financial Advisor will make proposals/recommendations to deal with any such delays.
Other Reports
In addition to the above-mentioned reports prepared by the Financial Advisor, each of the specialist partners of the Consortium will be responsible for producing the following documents:
Valuation Related
I. International Benchmark analysis of power generation company Functional Financial model taking into account all relevant issues Ways and means to enhance the valuation of the transaction
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IX. Corporate Related
Brief Transaction Structure Report Restructuring Report Bidders Pre-qualification Report Tariff Methodology and Regulatory Due Diligence Report
V. Legal Due Diligence Report Technical Due Diligence Report Financial Due Diligence Report with respect to restructuring options Environmental Assessment Due Diligence Report Report on Employee related matters
X. Data Room Schedule Valuation Report Proposed interim organizational structure of the company Report on loans and liabilities ofPGCL, analysis of contractual covenants and their impact including recommendations on the approach to negotiations with lenders and creditors for obtaining Lenders' Consents.
X. Marketing Related Work
Teaser Documents Pre-qualification (criteria) Document Local and international Road Show, itinerary, background briefing on investor interests Presentation material to prospective investors
V. Plan for media relations Plan for investor relations Draft / Final Tender Documents Sale and Purchase Agreement (SPA) Power Purchase Agreement (PPA)
X. Fuel Supply Agreement (FSA) Implementation Agreement (IA) Any other agreement required for successful complemention
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APPENDIX-B
IMPLEMENTATION SCHEDULE
It is expected that the assignment will commence as early as possible and would be completed in optimal time span. The Financial Advisor with the support of their sub-consultants (experts) shall advise on indicative timetable for completing the key milestone summarized as under:
U Mobilization of the Financial Advisor Month 1 Li Due Diligence by Financial Advisor Month 3 Li Privatisation Plan by Financial Advisor Month 4 Li Finalization of Financial & Valuation Model Month 4
Information Memorandum, Pre-qualification Month 5 & Bidding Documents and Evaluation Criteria
i EOIs and issue of RSOQs / RFP package Month 6 zi Pre-qualification of Investors Month 8 U Investor's Due Diligence complete Month 10 Li Valuation Report and approval Month 11 zi Bidding process complete Month 12
The proposed twelve (12) month period will be extended by the time required by the Client and other relevant regulatory bodies for approving the Deliverables and obtaining any consents or approvals for the Project from any relevant party. The proposed period will also be extended for delays in providing documents, information, from time to time, required by the Financial Adviser or its Sub-Contractor with respect to the performance of the Services including the time periods allowed for submission of bids, time given to bidders for due diligence, submission of relevant responses/documents (such i
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SOQs etc.) by interested parties at various stages during the pre-qualificatio w closi period agreed with the bidders.
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APPENDIX-C
INTEGRITY PACT
Agreement Number: Dated: Agreement Value: Agreement Title:
(Name of Financial Advisor (FA)) hereby declares that it has not obtained or induced the procurement of any contract, right, interest, privilege or other obligation or benefit from client or any employee or consultant thereof any other entity owned or controlled by the client or GOP through any corrupt business practice.
Without limiting the generality of the foregoing, FA represents and warrants that it has fully declared the brokerage, commission, fees etc. paid or payable to anyone and not given or agreed to give and shall not give or agree to give to anyone within or outside Pakistan either directly or indirectly through any natural or juridical person, including its affiliate, agent, associate, broker, consultant, director, promoter, shareholder, sponsor or subsidiary, any commission, gratification, bribe, finder's fee or kickback, whether described as consultation fee or otherwise, with the object of obtaining or inducing the procurement of a contract, right, interest, privilege or other obligation or benefit in whatsoever form from GOP, except that which has been expressly declared pursuant hereto.
FA certifies that it has made and will make full disclosure of all agreement and arrangements with all persons in respect of or related to the transaction with Client and has not taken any action or will not take any action to circumvent the above declaration, representation or warranty.
FA accepts full responsibility and strict liability for making any false declaration, not making full disclosure, misrepresenting facts or talking any action likely to defeat the purpose of this declaration, representation and warranty. It agrees that any contract, right, interest, privilege or other obligation or benefit obtained or procured as aforesaid shall, without prejudice to any other right and remedies available to Client under any law, contract or other instrument, be voidable at the option of Client.
Notwithstanding any rights and remedies exercised by Client in this regard, FA agrees to indemnify Client for any loss or damage incurred by the Client on account of corrupt business practice of FA and further pay compensation to Client in an amount equivalent to ten times the sum of any commission, gratification, bribe, finder's fee or kickback given by FA as aforesaid for the purpose of obtaining or inducing the procurement of any contract, right, interest, privilege or other obligation or benefit in whatsoever form from Client.
Client FA
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VALUERS ..........AgreementNu'mber: STA"PV2RXR'S
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Dated:
Unitec Bank Limi:ed and EY Ford Rhodes (collectively called the 'FA") hereby declares that it has not obtained or induced the procurement of any contract, right, interest, privilege or other obligation or benefit from client or any employee or consultant thereof any other entity owned or controlled by the client or GOP through any corrupt business practice.
Without limiting the generality of the foregoing, FA r€presents and warrants that it has fully declared the brokerage, commission, fees etc. paid or payaole to anyone and not given or agreed to give and shall not give or agree to give to anyone within or outside Pakistan either directly or indirectly through any natural or juridical person, including its affiliate, agent, associate, broker, consultant, director, promcter, shareholder, sponsor or subsidiary, any commission, gratification, bribe, finder's fee or kickback, whether described as consultation fee or otherwise, with the object of obtaining or inducing the procurement of a contract, right, interest, privilege or other obligation or benefit in whatsoever form from GOP, except that which has been expressly declared pursuant hereto.
FAcertifies that it has made and will make full disclosure of all agreement and arrangements with all persons in respect of or related to the transaction with Client and has not taken any action or will not take any action to circumvent the above declaration, representation or warranty.
FA accepts full responsibility and strict liability for making any false declaration, not making full disclosure, misrepresenting facts or talking any action likely to defeat the Jurpose of this declaration, representation and warranty. It agrees that any contract, right, interest, privilege or other obligation or benefit obtained or procured as aforesaid shall, without prejudice to any other right and remedies available to Client under any law, contract or other instrunient, be voidable at the option of Client.
Notwithstanding any rights and remedies exercised by Client in this regard, FA agrees to indemnify Client fcr any loss or damage incurrec by the Client on account of corrupt business practice of FA and further pay compensation to Client in an amount equivalen: to ten times the sum of any commission, gratification, bribe, finder s fee or kickback given by FA as aforesaid for the purpose ' g or inducing the procurement of any contract, right, interest, privilege W6k ion or benefit in 9ormfroL
FA
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Annex – V