Prime Minister Imran Khan’s initiative to sell state land to pay off ballooning public debt culminated on Wednesday when the Privatisation Commission (PC) board approved the sale of 23 properties at a meagre price of Rs1.1 billion.
“Privatisation Commission board unanimously approved the bidders’ price for the auctioned properties,” said a statement issued by the Ministry of Privatisation after the board meeting, chaired by Federal Minister for Privatisation Mohammad Mian Soomro.
Twenty-three properties were auctioned with auction proceeds of Rs1.113 billion against the reserve price of Rs1.011 billion, it added. The auction price was mere Rs102 million or 10% higher than the reserve price. Government-owned 26 properties had been specified for the open public auction and the process started on September 7 and culminated on September 28.
Out of the 26 properties, three could not be auctioned due to various issues, including illegal occupation of the most expensive property in Lahore. In January last year, PM Imran had decided to sell state land to pay off the government’s ballooning debt, which crossed Rs36.3 trillion at the end of June this year.
The Pakistan Tehreek-e-Insaf (PTI) government added Rs14.3 trillion to the public debt in two years - more than what the PML-N had added in five years. However, the Rs1.1 billion amount is not sufficient to finance even one-day expenses of the federal government as the PTI government has so far added on an average Rs17 billion per day to the public debt.
Earlier, an inter-ministerial asset management committee, headed by the minister of maritime affairs, was constituted by the prime minister in January 2019 to oversee the identification and sale of federal government-owned or controlled properties.
The federal cabinet in March last year directed all the federal ministries to identify three properties each, free of all encumbrances having clear documents, for their disposal. PC had received details of more than 45,000 properties but initially 32 were picked for sale. Later, based on due diligence conducted by a financial adviser consortium (FAC), the reserve price of Rs6.62 billion was determined for 27 properties. Five properties were earmarked for use by the Naya Pakistan Housing Authority.
Out of the Rs1.1 billion, the maximum value was fetched by the Federal Board of Revenue’s 15-kanal land in Faisalabad, which was sold for Rs645 million, only Rs5 million higher than the reserve price.
There was a nominal increase in the bid price for the 23 properties compared with the reserve price. For instance, the price of two penthouses at the Islamabad Country Club was Rs60 million and their final price was Rs61 million.
An apartment at the Centaurs Residencia had the reserve price of Rs60 million and it was sold for Rs61 million. A shop at MM Alam Road Lahore had a reserve price of Rs31.23 million and the final price was Rs31.73 million. The reserve price for nine separate flats at the Shama Road Lahore was Rs41.7 million and they were sold at Rs42.8 million, higher by hardly Rs1 million.
The PC statement said the matter regarding future status of the three unsold properties - Republic Motors Lahore having reserve price of Rs5.1 billion, Commerce Division’s land in Multan worth Rs262.5 million and land in Rahim Yar Khan owned by the Aviation Division worth Rs162.6 million - would be placed before the Cabinet Committee on Privatisation (CCOP) for delisting or otherwise.
The Ministry of Industries and Production had already proposed that the Republic Motors property should be delisted owing to litigation as 35% of the property was owned by private owners and the eviction of 51 tenants would require a considerable length of time, said the planning ministry.
“It is, therefore, suggested by the Privatisation Commission board members that the decision regarding its status be decided by the CCOP,” it added.
The board also took up the issue of Water and Power Development Authority (Wapda) Rest House, K-P. Its auction had to be postponed as the provincial government requested to hand over the property, hence, the board members recommended that the property be delisted from the privatisation list and the proposal be placed before the CCOP. CCOP meeting is likely to take place on Friday, October 23.
Published in The Express Tribune, October 22nd, 2020.
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Anyone who has any experience of public sector auctions/bidding process would be familiar with the term 'pooling', where the bidders pool together to decide which item (property) is to be purchased by which bidder, at what price. The others willingly offer a price lower than the one offered by the eventual buyer. This should prompt the administration to cancel the bidding process altogether, and re-advertise with a new reserve price.
I think we are already pass the stage of no return in debt If we keep selling thing to pay without fixing With in few year nothing will be left