Services Hotel auctioned for Rs1.95 bn, Rs2m higher than reserved price

LAHORE: The Privatisation Commission (PC) Thursday made successful auction of the Services International Hotel, Lahore with bid price of Rs1.9517 billion to the single bidder, M/s Faisal Town Ltd, in an auction held here at a private hotel.

The auction was finally made in the third attempt as in the first two attempt the PC was unable to auction it. The cabinet had lowered down the reservation (or reserve) price as well after two failed attempts. This is the first-ever biggest successful auction transaction in the three years tenure of the Pakistan Tehreek-e-Insaf (PTI).

The PC fetched only Rs2 million higher than the reserve price of the auctioned property, approved by the cabinet as Rs1.9497 billion. Only two bidders participated in the auction process, while chairman of the successful bidder, Chaudhry Abdul Majeed, gave the first and last bid. The other bidder was the MCB Bank representative, who did not give their bid. However, he pointed out that the reserve price of the property was higher than the price allowed by the high-ups to participate in the auction.

The successful bidder also announced submission of the auction price in the government treasury in single payment, less than the payment time of 60 days, fixed by the government. Minister for PC Muhammad Miansoomro, Secretary PC Hassan Nasir Jamy and other officials of the PC were also present.

In his opening remarks before the start of the auction, Secretary Privatisation Commission Hassan Nasir Jamy mentioned that the financial advisor and the PC worked very hard to bring the property to the auction level. It took almost one-and-a-half years to get clearance from various departments to make the property auction-able. Furthermore, the PC would also facilitate the successful auctioneer till the transfer of the property, he added.

The official attached with the auction process said that around 25 parties had shown interest when the financial advisors were appointed for the auction of the property. Further, almost five investors had shown interest in the auction. However, finally only two showed up while one called the officials concerned saying he was stuck in traffic and would reach late. The process was delayed for almost half an hour for the third bidder, but he did not reach till the process was completed.

To a question by The News whether the National Accountability Bureau (NAB) action fears restrained potential investor from taking part in the auction process, Soomro said that investors had their own priorities. He said there were also other major projects in real estate sector including Ravi Urban Development Project, Lahore Business Districts, and process for those projects was under way. He said the PC was also in process of auctioning of power sector entities and other public sector enterprises. Thus, the investors have their own plans. Further, he added, white money is needed to make payment to the government auctions.

Later, talking to the media, the PC minister said the Commission would get approval from the quarters concerned for successful bidding and complete the process amicably. He said privatisation process was affected and slowed down due to COVID-19 pandemic. However, successful auction of the Services International Hotel was a big achievement to accelerate the process. “We will now expedite the privatisation process,” he said adding that financial advisor for the auction of the Pakistan Steel Mills would be appointed in few days. The government had already put the PSM auction on the fast track, he added.

About the PIA privatisation, he said the restructuring of the state-owned airline had already been initiated, while it was not put on the privatisation list yet. However, the government would privatise Balloki and Haveli Bahadur Power Plants, SME Bank Limited, First Women Bank Limited, Jinnah Convention Centre, Islamabad, House Building Finance Corporation (HBFC) and others.

Successful bidder, Faisal Town Ltd Chairman Ch Abdul Majeed told The News that they had entered the Lahore market for the first time. “Earlier, we have bought government properties in Islamabad including Blue Area, E-11-III and others.” He said that the group had planned construction of a multi-purpose high-rise tower consisting of shopping malls, hotel, apartments and others. He vowed to develop a project which earlier did not exist in Lahore.