The government on Monday decided to hire a firm for giving Roosevelt Hotel in New York on lease, in a decision that may ensure the best use of the idle asset located at the most prized place.
The Cabinet Committee on Privatisation (CCOP) reaffirmed its earlier decision on Roosevelt Hotel, said the finance ministry.
CCOP’s proceedings also underscored once again that the country could not even effectively handle the privatisation transaction of less than Rs2 billion.
Headed by Finance Minister Ishaq Dar, the CCOP again referred the sale of Services International Hotel, Lahore to the law ministry.
The committee also decided to delist the sinking SME Bank from the privatisation programme, a decision that provided a sufficient base to wind up both the Privatisation Commission (PC) and SME Bank.
“Regarding privatisation of PIA Investment Ltd (PIA-IL)-owned asset – Roosevelt Hotel, New York, the CCOP decided to uphold its earlier decision dated July 2, 2022, where the meeting directed the Privatisation Commission to initiate the process of appointment of financial adviser (FA) to undertake the envisaged leasing of Roosevelt site for meeting up a joint venture project for prospective mixed-use development, through the best suited mode of privatisation,” said the Ministry of Finance.
Usually, it takes around four months to hire a financial adviser, who then takes significant time to prepare a roadmap. Roosevelt Hotel faces the threat of being declared as a heritage building by the local authorities in New York.
Pakistan’s Foreign Office has asked the US ambassador in Islamabad to request the authorities in New York not to declare the property as a heritage building.
The hotel has been closed for over one year and Pakistan has paid more than $150 million during that period to meet various contingencies.
Former finance minister Asad Umar-led CCOP in October 2018 had decided to evaluate the possibility of constructing high-rise hotels on the land of Roosevelt Hotel on a public-private partnership (PPP) basis.
PIA-IL, the parent company of Roosevelt Hotel and wholly owned subsidiary of PIAC, engaged services of Deloitte to conduct a feasibility study. In July 2019, Deloitte recommended that the best use of the hotel would be to redevelop the site into mixed use, primarily an office tower over retail and condominium.
Subsequently, the CCOP in July 2020 directed the Privatisation Commission to initiate the process of appointing a financial adviser to undertake the leasing of Roosevelt site. The last government initiated the process of hiring the adviser and the Privatisation Commission board approved the draft terms of reference (ToRs) in September 2020.
However, the matter was put on hold on the advice of Attorney General of Pakistan (AGP) owing to litigation in a British Virgin Islands’ (BVI) court pertaining to the Reko Diq project and Tethyan Copper Co (TCC).
The Privatisation Commission requested the CCOP for re-affirmation of the previous decision or advice otherwise, as deemed appropriate, owing to the fact that the earlier approvals were singularly focused on the recommendations of a Deloitte report.
The Privatisation Commission tabled a summary related to the privatisation of Services International Hotel. The CCOP, after detailed deliberation, referred the matter to the Law and Justice Division for review of its earlier advice, according to the finance ministry.
In August 2021, Faisal Town (Pvt) Ltd submitted the highest bid of Rs1.95 billion, which was approved by the federal cabinet in October 2021.
After complaints of the sale of asset at a lower price, the government set up a sub-committee that too after due deliberations concluded that the previous valuation was reasonable at the time it was auctioned.
The report of the sub-committee was presented to the CCOP that directed the commission to resubmit the summary after seeking input of the Law and Justice Division.
But the Ministry of Law suggested that the matter of fresh valuation be referred to the Federal Investigation Agency (FIA) to probe what could be constructed on the site.
Faisal Town Ltd issued a legal notice on October 4, 2022 due to delay in signing of a sale deed, transfer of title and handing over property to him.
The finance ministry said that the Privatisation Commission presented a summary on privatisation of SME Bank and briefed the meeting on its status.
“After detailed discussion, the CCOP considered the recommendation of the Privatisation Commission board and decided to delist SME Bank from the privatisation programme, enabling the SBP and Finance Division to proceed further with alternative options.”
Pakistan Kuwait Investment Company (Pvt) Ltd and Pak Libya Holding Company (Pvt) Ltd, Veon Holding and Saudi Pak Industrial and Agricultural Investment Company had been shortlisted for the bidding.
Published in The Express Tribune, December 27th, 2022.
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