Lapses occur in early stage of PSM privatisation

NCBMS Consulting disqualified, Pak China Investment Bank-led consortium makes the cut.

Shahbaz Rana July 11, 2015
Price: Rs444.1m is the amount the Pak-China Investment Bank-led consortium would charge as consultancy fee. PHOTO: AFP

ISLAMABAD: The committee handling the process to hire a financial adviser for the privatisation of Pakistan Steel Mills (PSM) has apparently committed serious lapses in the evaluation exercise, resulting in the disqualification of NCBMS Consulting, according to documents and sources close to the matter.

As a result, the consortium, led by Pak China Investment Bank, was given the financial consultancy contract on a sole bid basis. The eight-member evaluation committee, constituted by the Privatisation Commission (PC) chairman, had technically qualified the consortium of Pak China Investment Bank.

The other partners in the consortium were Fergusons and Company (PWC), Cornelius, Lane & Mufti (CLM), Abacus Consulting, SinoSteel and Iqbal Nanjee and Company.

The Pak China Investment Bank-led consortium got 83 scores, according to the documents of the PC.

The other consortium, which had submitted technical and financial bids for taking over the job of financial adviser, was of NCBMS Consulting Private Limited, Rehman Sarfaraz Rahim Iqbal Rafiq (RSRIR), ‘VO’ Tyazhpromexport, Rizvi, Isa, Afridi & Angell (RIAA) and SURVAL.

Read: Govt shelves expansion of PSM, wants to privatise sick unit

The evaluation committee gave 68 marks to the NCBMS-led consortium -two short of the threshold of 70, resulting in the disqualification.

Meanwhile, the Pak-China Investment Bank-led consortium would charge a minimum Rs444.1 million as consultancy fee. The fee will go up if the government manages to privatise PSM, as the fee is worked out on the notional sale price of $100 million.

The government had committed with the International Monetary Fund (IMF) to privatise the PSM in December this year. However, it appears that serious lapses occurred during the evaluation process.

According to the Top Sheet - carrying details of technical scores - five out of eight members, gave 70 or more marks to the NCBMS consortium. However, three gave less than 70. Two of them were employees of the PC while the third member was not physically present in the meeting. The member attended the meeting from Lahore through an audio link, confirmed officials who attended the evaluation committee meeting.

How was the decision made

The member, linked through an audio connection, awarded marks without a look at the presentations given by both contenders.

He gave 58 marks to the NCMBS consortium, which led to its disqualification, a member of the evaluation committee confirmed to The Express Tribune.  

“The NCMBS presentation was good and deserved at least 70 marks,” said a member of the committee.

Had the NCMBS qualified, the decision would have gone down to the financial bid.

PC Board Member Zafar Iqbal Sobani attended the meeting through the audio link. The other members included PC Board Member Aziz Nishtar, PSM Chief Executive Officer Zaheer Ahmed Khan, Ministry of Finance Joint Secretary Zahoor Ahmed and Ministry of Industries and Production Senior Joint Secretary Arif Ibrahim. Anwar Malik, Anjum Nazir, and Azeem Qadir Haye represented the PC in the evaluation committee.

Although Sobani attended the meeting through the audio link, proposals submitted by the parties and their presentations were shared with the committee members, including Sobani, much before the scheduled meeting, said Ahmad Nawaz Sukhera, Secretary Privatisation.

The Secretary maintained that no lapse occurred at the evaluation stage.

Read: voiding political backlash: PIA, PSM privatisation put on backburner again

On the other hand, the Senate Standing Committee on Finance has already expressed its reservations over the way parties are shortlisted by the PC. Senator Kamil Ali Agha had stated that all wrongdoings in any privatisation transaction take place between the evaluation committee and the pre-bid conference stage.

The Pak-China consortium was declared eligible during its second attempt. In its first attempt, in January 2015, the consortium could not technically qualify and obtained only 48 marks.

Iqbal Naanjee and Company is also part of the Pak China consortium. It is the same firm that evaluated Heavy Electrical Complex in the range of Rs1.2 billion to Rs1.5 billion but the evaluation was not accepted by the PC and the entity was sold at Rs250 million.

Despite repeated attempts, spanning over two days, the PC Chairman Mohammad Zubair was not available for the comments.

Published in The Express Tribune, July 12th, 2015.

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