As the tussle between the managing director and board of Pakistan Engineering Company (Peco) intensified, making the company dysfunctional, the government has decided to sack both parties from the company.
While considering the case of removal of Peco from the active list of privatisation, the Cabinet Committee on Privatisation (CCOP) had come to know that the Peco MD and board were engaged in a tussle, which had made the company dysfunctional.
During a briefing to the CCOP, the Industries and Production Division said that there was a serious dispute between the Peco MD and board of directors. The chairman observed that reconstitution of the board and removal of the MD was the first step in proceeding further, otherwise it would be kept pending.
The Privatisation Division briefed the cabinet body about the case and submitted the following proposals for consideration and approval of the CCOP as recommended by the Privatisation Commission board in its meeting held on June 3, 2021. It proposed that Peco may be removed from the active privatisation list.
The PC board recommended selling Peco land by the Privatisation Commission in light of the cabinet’s decisions dated April 30, 1994 and December 31, 2004 and subsequent Peco board decision for implementation on March 12, 2005 to settle the government liabilities.
It suggested considering the privatisation when the entity was free from inherent issues and encumbrances.
NAB investigation
The Privatisation Division secretary indicated that the government share had been reduced to 33%. However, the transaction that reduced the government share was under investigation by the National Accountability Bureau (NAB).
Therefore, the decision to delist was supported in view of multiple litigations. However, the sale of land was not supported on the pretext that it would fetch very low price of the asset and would also invite more litigation.
The privatisation secretary indicated that they would need to hire a transaction adviser to determine the true value of the asset. However, in the presence of the current MD and the board, the Privatisation Commission could not proceed further.
Hence, the chair suggested the reconstitution of the board and removal of the MD.
Meanwhile, the adviser to PM on institutional reforms and austerity stated that there could be legal implications, therefore, the advice of the Ministry of Law and Justice must be sought first.
The minister for industries and production supported the PM aide’s opinion to seek legal opinion of the law ministry. The CCOP considered the summary dated June 16, 2021, submitted by the Privatisation Division titled “Removal of Pakistan Engineering Company (PECO) from Active Privatisation List”, and constituted a committee. Privatisation Division secretary would act as convener of the committee.
The committee will come up with recommendations for the removal of major bottlenecks to proceed further including the removal of current MD and will also work on the reconstitution of Peco board of directors. The committee will seek opinion of the Law Division explicitly to reflect in its recommendations. It will submit recommendations to the CCOP for decision.
Published in The Express Tribune, July 1st, 2021.
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