No bending of regulations in Privatisation process of Heavy Electrical Complex: Privatisation Commission rebuts claims of any legal wrongdoing
Islamabad, September 09, 2015 (PPI-OT):This is in response to a few media reports published on 9th September 2015 on the special session of the Senate Standing Committee on Finance and Revenue, which was held on 8thSeptember 2015. The Privatisation Commission (PC) strongly rejects misrepresented reports about the Privatisation Commission officials for having admitted any faults and negligence in the privatisation process of the Heavy Electrical Complex (HEC).
Representatives of the Privatisation Commission provided all relevant information to negate any wrong perceptions that the Heavy Electrical Complex (HEC) was sold at a nominal price and that there had been any wrong-doing in the privatisation process by selling it to a sole bidder with low financial credentials.
PC officials explained the complete process which each transaction goes through, which includes review and diligence by top-tier financial experts and the PC Board, representing top corporate business leaders and government representatives at all stages of the process, including the Cabinet Committee on Privatisation (CCOP). It was reinforced that no transaction can go forward or be completed without the approval of the Privatisation Commission Board and the CCOP.
Regarding the HEC transaction, the Senate Committee was informed that the sale of HEC could not be concluded, as the buyer had failed to meet the terms and conditions set by the CCOP, and the PC had revoked the Letter of Acceptance (LOA) issued to the buyer, and forfeited his earnest money amounting to Rs 25 million. The buyer has gone to the Islamabad High Court against revocation of the LOA by PC, and has obtained an order of status quo.
In response to allegations about the credibility of Cargill Holdings Limited, it was informed that the company had been shortlisted along with two other companies (Fauji Fertilizers and Ellahi Group of Karachi), as they all met the financial threshold of having a worth of minimum PKR 2 billion. Therefore, the report published in the media about the company being a fake or having low credentials known to the Privatisation Commission is not accurate, as the company completely fulfilled the minimum financial requirements set out by PC.
On concerns about Cargill Holdings Limited’s registration being done one day after the PC Board’s approval to reinitiate the transaction and before the Expression of Interest of Investors was published by the PC, the Senate Committee was explained that this was the fourth time that PC was running the privatization process, and it was all public knowledge. Therefore, it was not an issue at all as ‘special purpose vehicles’ are commonly formed by holding companies all over the world for mergers and acquisition transactions.
In addition to this, Cargill Holdings Limited remained the only company to submit the ‘Earnest Money’ and subsequently its bid was approved as it met the terms and conditions set by the CCOP. As for the company being awarded the deal despite being the ‘sole bidder’, it was explained that according to the PC’s rules and regulations, it is fully and legally permissible, through a process termed as “negotiated sale”.
For more information, contact:
Haji Ahmed Malik
Principal Information Officer
Press Information Department (PID)
Tel: +92-51-9252323 and +92-51-9252324
Fax: +92-51-9252325 and +92-51-9252326