The financial advisers had originally priced HEC at Rs1.5 billion but the government sold it in return for Rs250 million in cash. PHOTO: FILE
The Privatization Commission board on Monday allowed the government to start afresh the Heavy Electrical Complex (HEC) sell-off process after the previous deal collapsed, as the opposition seeks amendments to the privatisation ordinance to ensure greater accountability of bidders and commission officials.
The PC board authorised the commission to hire new financial advisers before inviting bids from prospective bidders for selling HEC, which manufactures transformers, according to officials. The board asked the commission to ensure better marketing this time aimed at ensuring healthy competition.
PC suggests removing HEC from privatisation list
The financial advisers had originally priced HEC at Rs1.5 billion but the government sold it in return for Rs250 million in cash. On recommendation of the PC board, the Cabinet Committee on Privatisation (CCOP) approved HEC’s sale to Cargill Holdings Limited. However, the deal collapsed after the bidder failed to make payments.
Past dealings
On December 9, 2014, the PC board, for the fourth time, had given the go-ahead for inviting prospective bidders for the sale of HEC. A day after, a company with the name Cargill Holdings was registered in Kenya and it subsequently won the bid for only Rs250 million in cash.
A parliamentary panel that investigated the alleged wrongdoing has recently recommended to the government to refer the case to the National Accountability Bureau or the Federal Investigation Agency.
The PC board formally revoked the deal with Cargill Holdings, confiscating the Rs25-million earnest money. The commission has already registered an FIR against Sabur Rehman, the adviser of Cargill Holdings, as the Rs225-million cheque he submitted was dishonoured.
The privatisation of about 69 state-owned entities is one of the main pillars of the PML-N government’s economic manifesto. It has so far completed five transactions valuing over $1.7 billion during last two and a half years. All of them were relatively easy capital market transactions except for the strategic sale of National Power Construction Company.
The privatisation programme is almost at a halt now, as all big-ticket items like power companies, Pakistan International Airlines and Pakistan Steel Mills are waiting for the government’s decision.
PC ordinance amendments
Meanwhile, a joint session of parliament would take up an opposition-backed bill that seeks amendments to the PC Ordinance of 2000. The Senate has already passed the bill but the National Assembly did not take it up for voting within the constitutional limit of three months.
Former senator Sughra Imam of the Pakistan Peoples Party had originally moved the PC Ordinance Amendment Bill. After her constitutional term ended in 2013, another PPP senator Farhatullah Babar took up the bill. The opposition wants that it should be binding on every bidder to get a national security clearance certificate from the government and agencies concerned before evaluation of the bids by the Privatisation Commission.
The private-member bill also seeks a role for the Auditor General of Pakistan (AGP), proposing that after completion of every privatisation transaction the AGP should conduct post-privatisation audit.
Similarly, there was also a proposal that external auditors should also conduct the audit of such transactions to ensure transparency.
Former senator Imam had also proposed that buyers should not sell the privatised assets without prior permission of the federal government. She also sought greater role for the PC, suggesting that the commission should have the mandate to ensure that privatisation proceeds were only used for debt retirement instead of budget financing.
One of the contentious proposed amendments was that the federal government could launch an investigation into any privatisation transaction within 10 years of the completion of privatisation process.
Botched HEC privatisation: Panel calls for sending case to anti-corruption watchdog
Currently, the limit is one year and the government is in no mood to extend the threshold, as it would not like the next government to investigate its privatisation transactions.
There is another amendment pertaining to the disclosure of conflict of interests by the commission, staff or other employees, including advisers, consultants or their family members. The Senate passed this amended in January 2014 but it is unlikely to be tabled in the current joint session.
Published in The Express Tribune, March 22nd, 2016.
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