Govt sells obsolete Genco plants to Wah Industries
ISLAMABAD: In a rare government-to-government (G2G) transaction, Wah Industries — operating under the Ministry of Defence — has acquired about 30 obsolete power plants from public sector generation companies (Gencos) for Rs38.255 billion, following the failure of the government’s ambitious open auction plan.
The Power Division confirmed that under three separate sale agreements, Wah Industries purchased the non-functional plants from Northern Power Generation Company Ltd (NPGCL), Central Power Generation Company
Ltd (CPGCL), and Jamshoro Power Company Ltd (JPCL). The agreements were signed on Tuesday, Thursday, and Friday, respectively.
The sale price marginally exceeded the reserve price of Rs38.224bn, previously set under Wapda’s auction regulations, which stipulate that G2G sales cannot occur below reserve value. With these agreements, the total revenue from both auction phases has reached Rs46.73bn, including Rs9.053bn earned from the March 18 auction of seven plants with a combined capacity of 1,016 megawatts (MW).
A Power Division official disclosed that the relatively better-performing 415MW Guddu thermal power plant was withheld from this transaction due to interest from a leading US firm for its potential refurbishment at a higher price.
In a press release, the Power Division said the State Bank of Pakistan had set a reserve price of Rs45.817bn for 61 outdated units, while the concluded sale fetched Rs46.73bn. In the first phase, 31 units were sold for Rs8.475bn against a reserve price of Rs7.593bn.
The division added that the sold units had been accumulating billions of rupees in annual operational costs. Their disposal is expected to yield substantial public savings. Furthermore, around 3,200 surplus employees from the decommissioned plants have been transferred to distribution companies (Discos), while approximately 774 officers still remain at the sold sites.
Sale raises Rs46.73bn after auction failure; over 3,900 employees reassigned or retained
The G2G deal was finalised under directives from the Prime Minister’s Task Force on Energy, led by Lt Gen Zafar Iqbal, following the second failed auction and delays in realising proceeds from the first round.
As part of broader power sector reforms aimed at reducing ballooning capacity payments and circular debt, the government last year decided to shut down ageing, redundant Genco plants. It initiated an international bidding process to auction obsolete machinery and equipment — excluding land — to reduce fiscal pressures stemming from salaries, plant operations, maintenance, and capacity charges.
The Generation Holding Company Ltd (GHCL) was given a three-month deadline by the Energy Task Force to complete the auction and transaction. While the first auction round was held on March 18, it failed to attract international bidders. Contractors who secured contracts were required to pay 18pc general sales tax and 10pc income tax to the Federal Board of Revenue (FBR) on the contract amount.
According to contractual terms, the payment was to be made either fully in advance or in four instalments over three months: 30pc within seven days of contract signing (without equipment removal), 25pc after 30 days, another 25pc after the following 30 days, and the remaining 20pc in the final month.
Although dismantling was permitted early on, equipment removal from the sites was restricted until full payment. However, the proceeds from the deal have not yet been fully realised.
Published in Dawn, July 26th, 2025