Govt nods 97pc divestment in Heavy Electrical Complex

ISLAMABAD: The Cabinet Committee on Privatisation on Monday approved divestment of majority stake in state-owned Heavy Electrical Complex and transaction structure for sale of the House Building Finance Company.

The cabinet committee meeting, presided over by Adviser to the Prime Minister on Finance and Revenue Hafeez Shaikh, approved the transaction structure for the divestment of 96.6 percent shares of Heavy Electrical Complex (HEC).

The Cabinet Committee on Privatisation (CCoP) directed the ministry of industries and production for the amicable and earliest resolution of issues related to regular employees of HEC. There are 238 employees working at HEC and out of which 213 are casual workers and remaining are officers.

The Privatisation Commission failed to sell HEC several times in the past, but now it renewed efforts to accomplish the task, according to sources. The government will keep the share of Benazir scheme in the HEC intact, they said.

Sources said the power division had showed interest in getting control of HEC. Now things are moving towards divestment, they said. However, it is not yet known how much interest the private sector will show to take over control.

The meeting also approved the transaction structure for the privatisation of the House Building Finance Company (HBFCL). The power division was also asked to consider extending the validity of type testing licence of Heavy Mechanical Complex.

The decision was already taken in August, but was not ratified by the cabinet for want of some additional information regarding the profitability and other issues of the entity. The meeting was told that if the transaction proceeds ahead, the new investor can bring in capital, operational expertise, capacity enhancement of HBFCL and new product development, which would eventually enhance its profitability and market share in housing mortgage for middle and low income groups of the society. The CCoP accepted the proposal for moving ahead with the transaction structure for divestment.

The CCoP also constituted a committee to improve the transaction structure for Pakistan Steel Mills (PSM) in consultation with the appointed financial/transaction adviser for further incorporation of market requirements.

The CCoP also approved the recommendation of the Privatization Commission Board to open, operate and close accounts in scheduled banks for the execution of privatisation transactions, including other operations in compliance with the central bank’s guidelines.

The meeting was told that out of the 27 properties the bid price for 23 had been received. The financial adviser was asked to recommend a way forward on two unsold properties in Multan and Rahim Yar Khan. The committee also directed to engage the chief secretaries of Khyber Pakhtunkhwa and Punjab to resolve pending issues relating to two properties in Swat and Lahore.

The CCoP also constituted a committee to look into various sectoral issues related to the privatisation of National Power Parks Management Company. The committee will meet within week to deliberate on the way forward. This committee will specify issues and set up guidelines for addressing all the pending issues with relevant quarters.

The CCoP approved the guidelines for all concerned ministries/ divisions to ensure that the management of public sector enterprises, falling under the domain of the Privatization Commission, runs smoothly. The guidelines direct all concerned to comply with the model checklist of the actions that may be taken/ should not be taken by an enterprise on the privatization list, as well as other instructions issued by the Privatization Commission for each transaction from time to time.

The CCoP directed officials to resolve all the issues before the initiation of privatisation process. The committee approved a model questionnaire that would help in gathering all the relevant information regarding the entity that has been approved for privatisation.

All ministries/divisions and state-owned enterprises – having assets in the privatisation list – will provide information required in the model questionnaire to the Privatization Commission within 30 days from the date such request reaches the relevant department.