PSM financial adviser: Sole consortium fails technical evaluation

Disqualification would further delay privatisation by six months.

ISLAMABAD:

An evaluation committee has knocked out the sole consortium that submitted a bid for taking over the job of financial adviser for selling the Pakistan Steel Mills (PSM) on technical grounds, dealing a blow to the plan of privatising the ailing entity by the end of this year.

The consortium of Pak-China Investment Bank, Grant Thornton consulting, Tyazhpromexport, RIAA Law and AASA Consulting could not obtain the minimum 70 marks during technical evaluation by the committee on Friday, a senior official of the Privatisation Commission told The Express Tribune.

In its last meeting, the board of Privatisation Commission (PC) had allowed the commission to consider the technical and financial proposal of the sole consortium that placed the bid in response to the Expressions of Interest (EOI) invited by the government.



The board took the decision on the basis of legal advice that allowed the hiring of the financial adviser on a single-bid basis. Legal wizards were of the opinion that the contract awarded on the basis of single bid would not be in violation of the Public Procurement Regulatory Authority rules.

The board had allowed the PC to hire the consortium provided its bid was technically and financially viable.

The evaluation committee invited the interested party this week, asking it to make a technical presentation. The consortium was judged on the basis of relevant experience to carry out the job, competency of the team, work plan and methodology and presentation. However, the consortium failed to obtain the needed 70 points and stood disqualified.

The EOI for hiring the financial adviser was floated in October last year. The last date for the submission of technical and financial proposal was November 28, 2014.

Only two parties expressed interest and requested to extend the deadline for the submission of the proposal. In view of this request, the deadline was first extended to December 12, then to December 29 and finally to January 14.



After coming to power, the PML-N government had decided to privatise the country’s largest industrial complex. Subsequently, the Cabinet Committee on Privatisation granted approval for an early implementation of the privatisation programme, which included the ailing unit.

It first set the December 2014 deadline to privatise the PSM. The deadline was twice revised and has now been extended to December this year. The government’s privatisation agenda is succeeding only to the extent of divestment of shares of profitable entities.

The PC official said that the disqualification of the consortium would further delay the privatisation of the entity by at least six months. He said this has been conveyed to Prime Minister Nawaz Sharif. The government would now re-advertise the EOI for hiring the financial adviser.

PC Chairman Mohammad Zubair has said that companies were reluctant to show interest in being appointed as financial adviser for PSM, due to its history, especially the political implications and Supreme Court’s verdict on its previous privatisation.

On the same grounds, he had argued in the board to hire the adviser on a single-bid basis instead of re-advertising the EOI. However, his plans failed after the single party fell short of expectations.

The accumulative losses of PSM have crossed Rs200 billion and the Economic Coordination Committee approved a Rs18.5 billion bailout package in April last year to restructure the entity before its privatisation.

However, the PC chairman told the board that the bailout package has also ended, “with no considerable outcome”.

The Pakistan Peoples Party has also opposed the privatisation of PSM, as it had recruited thousands of people on the basis of political loyalties in its last five-year tenure.

Published in The Express Tribune, February 15^th, 2015.

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