Pak American Fertilisers: Extension in payment deadline violated rules, says bidder

Kohinoor Textile says it was denied opportunity to make fresh offer.

ISLAMABAD: The Privatisation Commission extended the deadline for the payment of bid price by the buyer of Pak American Fertilisers, which was a violation of bidding procedures, says one of the companies that made offers during privatisation of the fertiliser producer.

The government would have fetched a better price had it invited bids afresh for the company, which was recently taken over by a consortium of banks, led by National Bank of Pakistan, for failure to repay loans.



Talking to The Express Tribune, Kohinoor Textile Mills Director Waleed Saigol alleged that Azgard-9 was given a favour when it got an extension in the deadline for paying the bid price. On the other hand, Kohinoor was denied a chance to make the offer afresh, he said.

The remarks came in the backdrop of a special audit report in which the Auditor General of Pakistan (AGP) had pointed out irregularities in the sale of Pak American Fertilisers to Azgard-9 and recommended an investigation to hold accountable the people responsible for lack of transparency in the sales process.

The AGP observed that the Letter of Acceptance was issued to Azgard-9 without providing an opportunity to the two bidders selected for the second round to participate in an open auction.

The AGP also noticed that the third highest bidder, Kohinoor Textile Mills, had clearly expressed its continuous interest in the bidding and written a letter, seeking equal opportunities.

According to Saigol, five interested investors – Nishat Chunian, Kohinoor Textile Mills, Fatima Group, Azgard-9 and Ibrahim Fibres – had participated in the bidding for the sale of Pak American Fertilisers.



Two of them quit in the first round and the remaining three – Ibrahim Fibres, Azgard-9 and Kohinoor Textile Mills – entered the second round. Ibrahim Fibres failed to continue pursuing its interest in the offer and Azgard-9, the second highest bidder, was given 90 days to pay the bid price.

However, the company could not be able to pay and got two more months. Meanwhile, a cash flow of Rs2 billion was generated in the fertiliser company during the period.

“In principle, the Privatisation Commission should have invited the bids again after Azgard-9 could not make payment within the 90-day timeframe,” Saigol said. “They should have followed the same principle as that adopted when Ibrahim Fibres pulled out and awarded the bid to us. At least, we should have been provided the opportunity to participate in fresh bidding.”

Because of default on loan repayments and a lack of transparency in the privatisation process, the best fertiliser plant in the country stood closed now, he remarked.

In its reply to the audit report, the Privatisation Commission management said the Cabinet Committee on Privatisation (CCOP) had approved the proposal and accordingly the offer for sale of shares to Azgard-9 and Jehangir Siddiqui Capital Markets was finalised.

The third highest bidder could only be asked to participate in the second round if Azgard-9 had refused to take part, it said.

Published in The Express Tribune, November 14^th, 2014.

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