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Labour ends opposition to Kot Addu power plant privatization

ISLAMABAD: Pakistan's Privatization Commission has won over a labour union which for months resisted the transfer of state-owned Kot Addu power plant to foreign management, an official said on Thursday.

Ejaz Ahmed, a consultant with the Commission, told Reuters the labour union agreed to sign a pact on August 27 to allow the partial sale of the 1,600-megawatt thermal plant near the city of Multan in Punjab province.

"It is a big hurdle out of the way for Kot Addu and it has set a good precedent for the sale of other plants," Ahmed said.

Opposition from the union, representing about 160,000 employees of the state Water and Power Development Authority (Wapda), had held up the sale of a 26 percent stake in Kot Addu and transfer of management control to a strategic investor.

The investor has not yet been selected but British Gas, Britain's National Power, the US-led CMS consortium and US companies Mission Energy and Southern Electric have been shortlisted.

The deal was originally due to have been completed in March.

The strategic investor will assume the plant's $756 million debt from Wapda. The government will retain the remaining shares.

Ahmed said executives from these companies would now be able to visit the plant, which had been placed off-limits to buyers due to the union resistance.

"The short-listed companies will be able to prepare the due diligence reports on financial, technical and other aspects before making their bid," he said.

The union had staged several marches and demonstrations against the partial privatization of Wapda plants and its members had prevented prospective buyers from entering them.

Union leader Khurshid Ahmed, who had strongly opposed the sale, told Reuters by telephone from Lahore the union had agreed to allow the privatization to go ahead with guarantees of job security and better working conditions for employees.

"We had only two options: either to suspend electricity to the whole country to press for acceptance of our demands or to get a better package for the employees at the plant," he said.

The jobs of Kot Addu's 800 employees were not threatened by the privatization plan, but union officials said they believed the privatization process eventually would put jobs at risk because private managers might want to reduce the workforce.

Ahmed said similar moves for partial privatization of other state-owned power plants, such as the Jamshoro power station, would now be easier to implement.-Reuter