Failed privatisation: Zubair hits back at criticism over HEC deal

Says he alone does not decide on selling state entities

ISLAMABAD: Reacting to a report that pointed fingers at the top management of the Privatisation Commission over selecting a fake firm in the Heavy Electrical Complex case, PC Chairman Mohammad Zubair said that he was not the final authority in taking the decision on selling a state unit.

“Any privatisation transaction has to pass through a four-tier scrutiny process and the final decision always rests with the Cabinet Committee on Privatisation (CCoP), headed by Finance and Privatisation Minister Ishaq Dar,” said Zubair while speaking to the media.

He said each transaction had to be cleared by an evaluation committee, a transaction committee, the PC Board and finally by the CCoP. “The chairman and the privatisation secretary do not have unilateral powers to direct or influence any transaction as our main role is to monitor and regulate the process,” he added.

He was speaking days after a report prepared by the sub-committee of the Senate Standing Committee on Finance and Privatisation found that the ‘top management of the PC showed high level of incompetence and wilful error of judgments in conducting the HEC transaction.’

The sub-committee recommended removing the chairman and secretary from their positions and sending the case to either the National Accountability Bureau or Federal Investigation Agency for further investigation.

After holding three meetings, the CCoP had approved the sale of state-owned HEC for Rs250 million to an unknown Kenya-based company. However, the deal failed after the bidder defaulted on payments.

The parliamentary panel found that the HEC transaction committee, in its January 27, 2015 meeting, despite knowing the fact that Cargill Holdings was incorporated on December 10, 2014 with no prior background in the relevant industry, approved it as a qualified bidder without conducting proper due diligence.

The sub-committee also found that the criteria set to declare a bidder eligible for taking part in a company’s privatisation were faulty. It recommended that all consultants working in the PC should be barred from undertaking any transaction in the future and new recruitments should be made.

“Some quality decisions were taken during the past two years and the commission won acknowledgements and awards from the international community,” said Zubair. “About $1.7 billion were raised through privatisation during two years.”

Privatisation updates

Zubair said the government was committed to the privatisation programme and added that politics could not be separated from economic decision-making.

He said the government was also committed to the privatisation of power distribution companies, admitting that there were delays in carrying forward the process.

“The privatisation of Faisalabad Electricity Supply Company (FESCO) has been stalled at much advanced stage. The government had invited the ‘Expression of Interest’ from prospective bidders,” he said, adding that the power sector privatisation process might again begin in the next couple of months.

“After the strike by the employees of Pakistan International Airlines (PIA), the government did not want to give an opportunity to the employees of power distribution companies for another one,” said the chairman while explaining the decision to delay FESCO privatisation.

While commenting on the government’s decision to set up Pakistan Airways Limited with an authorised capital of Rs100 billion, the chairman said that at the moment nothing could be said about future plans of the new airline.

To a question on Pakistan Steel Mills, Zubair said that the Commission was in contact with the Ministry of Finance over giving a response to the Sindh government.

Published in The Express Tribune, February 27^th,  2016.

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