Top official says privatising entity would be unwise. PHOTO: FILE
ISLAMABAD: Heavy Electrical Complex (HEC), which the government almost sold at a meagre price of Rs250 million, will earn over Rs200 million profit this fiscal year besides recording Rs2 billion in savings by supplying cheap transformers to power distribution companies, said a top official.
Kukab Mohyuddin, the chairman of State Engineering Corporation that owns HEC, said on Wednesday that privatising the HEC at this stage would not be commercially and strategically wise.
Mohyuddin gave the statement in a meeting of the special panel of the Senate Standing Committee on Finance, bringing into question the government’s privatisation policy. The panel that is investigating alleged wrongdoings in the failed HEC privatisation attempt had called the SEC Chairman along with the officials from Privatisation Commission (PC) and HEC.
The PML-Q’s Senator Kamil Ali Agha chaired the first meeting of the panel, unearthing many new facts that the government distorted to build the HEC privatisation case. The proceedings revealed that the government misled on the issue of HEC liabilities and needed investment to turn around the entity.
HEC Managing Director Mohammad Ali Khan contested Secretary in-charge Privatisation Ahmad Nawaz Sukhera’s claims on new investment in the company and running liabilities.
Government’s objection
The government had claimed that the loss-making HEC cannot be improved without making hundreds of millions of rupees investment to replace its obsolete machinery.
In the last four months, the HEC has already earned Rs25 million profit, which is expected to increase to over Rs200 million by June 2016 without making any new investment, said Mohyuddin. In addition to this, the transformers HEC is supplying to power distribution companies are contributing to Rs2 billion annual savings, he added.
The SEC chairman said once the company goes into private hands, the cost of transformers will suddenly surge up to 30%, which will be then passed on to consumers. He said Chinese transformers were 40% expensive than those produced by the HEC.
He also said that the HEC, spread over an area of 62 acres, was located on route of China Pakistan Economic Corridor and privatising it will be strategically incorrect.
“It seems that the HEC was deliberately destroyed in the past two years to make a case for privatisation”, said Senator Mohsin Aziz.
Management’s case
Secretary in-charge Privatisation Ahmad Nawaz Sukhera said that Rs350 million were needed for replacing the HEC’s main manufacturing machine, the George. However, the HEC MD contested Sukhera’s claim and said he never asked for any capital injection from the government.
The secretary also claimed that the actual price of the HEC deal was Rs1.095 billion including Rs435 million running finance loan from the Bank of Khyber. HEC MD contested the Rs435 million liability claim and said that against the loan the HEC had movable assets of the same amount, therefore it was never a liability.
Senator Mohsin Aziz observed that some heads must roll for presenting facts in a manner that does not represent true picture. The Secretary in-charge Privatisation said that he was presenting facts provided by the Ministry of Industries.
Published in The Express Tribune, December 3rd, 2015.
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