Heavy Electrical Complex: Distorted details surface in privatisation deal

Minutes of the meeting reveal transaction was finalised by one vote.

Shahbaz Rana May 02, 2015
The reality is that during the voting there was a tie at 4-4. CREATIVE COMMONS


Contrary to the Privatisation Commission’s claim that six out of nine members of its board supported the deal to sell Heavy Electrical Complex at Rs250 million, fresh details reveal that four of them had actually opposed the deal at such a low price.

While recording the minutes of the meeting, PC had written that three board members opined for re-initialisation of the transaction while six were in favour to accept Cargill Holdings Limited offer of paying Rs250 million in cash while also taking up the “existing liabilities”.

However, the reality is that during the voting there was a tie at 4-4 and the decision to sell the entity was taken after PC Board Chairman Mohammad Zubair cast his vote in favour of the deal. The PC Board took the decision with a thin majority.

Last week, the opposition in the National Assembly staged a walkout while raising transparency concerns in the HEC privatisation. The government has not yet signed the Sale Purchase Agreement (SPA) with Cargill Holdings Limited – the buyer whose identity is not yet clear.

The issue of inaccurate minutes of the board meeting surfaced when the PC circulated the minutes among board members, prompting one of them to highlight the inaccuracy, said officials in the PC.

Four members recommended that the process of privatisation should be re-initiated and the government should go for a fresh bidding process, they added.

Of the remaining five members, who voted in favour of the deal, two were official members – the PC Chairman and Privatisation Secretary Ahmad Nawaz Sukhera. Majority of the private members were against the deal.

Under the Privatisation Ordinance of 2000, the PC board can take a majority decision.

The PC Board meeting was held on March 24 under the chairmanship of Zubair. It is not clear whether the PC informed the Cabinet Committee on Privatisation that the decision was taken with a single vote majority.

It was a collective decision of the Board, irrespective of whether three or four members of the Board opposed the deal, said an official of the PC.

The official insisted that all concerns about the deal would be addressed in the SPA.  Zubair was not available for comments.

Questions have also been raised over the buyer of HEC, the Kenya-based Cargill Holdings Limited, which has received a legal notice from Cargill Pakistan Holdings. Cargill Pakistan, a subsidiary of US-based Cargill, claimed that “Cargill is the registered proprietor of the trademark, Cargill, worldwide and in Pakistan, having tremendous goodwill and reputation.”

The Cargill Holdings Limited was registered in Kenya on 10th December 2014 –a day after the government decided to re-advertise the process of HEC privatisation.

Published in The Express Tribune, May 3rd, 2015.

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Woz Ahmed | 6 years ago | Reply @imran: Any proof ? Or are you a troll or dissatisfied employee ?
Kalaam | 6 years ago | Reply This is the first loss making SOE that they are privatising. As you can see there was only one qualified buyer and so the government had no leverage in negotiations. Other indications of how poorly foreigners view Pakistan are the low FDI numbers. For the first time ever profit repatriation from past FDI is greater than new investments! It would be better if Pakistanis were more realistic with their expectations.
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