The Privatisation Commission board has pre-qualified eight bidders in the strategic sale of National Power Construction Corporation, as reputable firms vied for acquiring the entity that, according to the government’s expectations, may fetch a minimum of Rs2 billion.
Headed by chairman Mohammad Zubair, the board gave the go-ahead to sell the entity. The government wants to complete the transaction by next month – that will be its second strategic sale after the controversial deal of Heavy Electrical Complex.
As many as 16 parties had shown interest and the Transaction Committee, headed by PC board member Zafar Iqbal, cleared eight of those for consideration. Out of these eight, the Transaction Committee had certain objections in two cases, which was a consortium led by Fatima Trading Company and a consortium led by Habib Rafiq, said officials who attended the meeting.
The PC has hired a consortium led by MCB Bank Limited and United Bank Limited as financial advisors for the transaction.
The board declared the consortium led by Fatima Trading Company as prequalified. The group is involved in the fertiliser, sugar, power and textile businesses and has a net worth of Rs60 billion as of 2014.
The Fatima Group earlier acquired 94.6% stakes of Pak-Arab Fertilizers in 2005-06 at a price of Rs14.2 billion. According to the PC’s findings, the Fatima Group subsequently indulged in a tax dispute with the Commission and the Federal Board of Revenue. The company won the court case.
Under the sale purchase agreement, the consortium was bound to pass the benefit of tax losses to the PC after the privatisation, which it currently disputes.
When contacted, the PC chairman said that the board has constituted a three-member committee of experts that will review whether the tax dispute emerged because of Fatima Group. He said apparently, it was the fault of the tax authorities.
The board also cleared a consortium led by Habib Rafiq Limited and Frontier Works Organisation (FWO) amid concerns that the latter cannot take part in the bidding process being a government entity.
Under the Privatisation Ordinance of 2000, entities owned or controlled by the federal government may not participate in the privatisation process. The FWO holds a minority stake of 49% in this consortium.
Zubair said that the board has asked the Commission to seek legal opinion from the Ministry of Law and Justice whether the FWO can become a partner in a consortium to acquire the NPCC. The Habib Rafiq-led consortium has a net worth of Rs33 billion, out of which Habib Rafiq Corporation’s net worth is only Rs3 billion.
The board also prequalified a consortium led by AsconCom of Saudi Arabia. The consortium has a net worth of Rs86 billion and is a competitor of the NPCC. The AsconCom is involved in electrical, telecommunication and civil contracting. The other consortium partner, Batterjee Holding Company, is involved in manufacturing, trading, distribution, construction, real estate, healthcare, pharmaceutical, oil and gas, packaging and investment.
Mahmood Textiles, with a net worth of Rs4 billion, was also declared as prequalified bidder. Some of the officials were of the view that Mahmood Textiles did not have relevant experience – an argument that Zubair said was irrelevant in the present corporate world.
The board also prequalified the Sino Hydro Corporation. The company’s net worth is Rs97 billion and it is the largest construction company in China. It has been involved in construction and operation of hydro and thermal power projects, distribution lines and power grids.
Among all the investors who have submitted SOQs, this investor has the largest net worth.
The board also declared Zahir Khan Brothers and Reliable Engineering Limited consortium as prequalified bidder. The consortium’s net worth is Rs10 billion and deals in construction projects. Mercury Middle East – a company from Bahrain – also prequalified, which has a net worth of Rs3 billion.
Mansour Al Mosaid of Saudi Arabia also prequalified. The company’s net worth is Rs5 billion.
Published in The Express Tribune, May 10th, 2015.
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