KARACHI, March 8: The successful bidder of the 73 per cent shares of Karachi Electric Supply Corporation (KESC) has not deposited the bid money of Rs20.24 billion by Tuesday (March8) , which is exactly a month of the approval given to the KESC privatisation deal on February 7 by the Cabinet Committee on Privatization (CCoP).

Instead, an official of the Privatisation Commission in Islamabad informed Dawn by telephone on Tuesday that the government would get bid money on March 20 from the successful bidder, the Saudi group Kandooz al Watan. But those involved closely in the privatization deals of public enterprises insist that the bid money has to be deposited within month of getting the Letter of Acceptance (LoA). The letter of acceptance is normally issued within a day or two after the CCoP gives approval to the deal.

The KESC privatization was organized on February 4 at Islamabad in which two bidders participated. The successful bidder Kandooz al Watan offered Rs1.65 for a share when it was being traded at Rs7 and 8 in the market.

On February 7, the CCoP headed by Prime Minister Shaukat Aziz gave the formal approval to the deal. An official press note issued by the government announced that a formal Letter of Acceptance is being issued in a day.

In this case it should have been either February 8 or 9. Even if instead of 28 days of February, 30 days are taken when the successful bidder should submit bid money it should be either by March 11 or 12 at the most.

The confusion on payment by the successful bidder has been further compounded by the unconfirmed reports in the market that the successful bidder is asking for a further extension in making payment to the government.

An official in the Privatization Commission maintained that the payment period for the bid amount is different in every privatisation deal. "It is fixed in consultation with the successful bidder," he insisted but was unable to substantiate his assertion with specific examples.

The Secretary of the Privatisation Commission was away from office and was said to be attending some "important meeting''. He did not respond till late in the evening.

The KESC privatization has become controversial from the day one when the employees, trade unions and all the opposition parties expressed their serious reservations on the deal. The Senate discussed the issue where leader of the Opposition Senator Raza Rabbani, the Jamat Islami Leader Professor Ghafoor delivered hard hitting speeches.

In the press note issued on February 7, after the CCoP approved the KESC privatization deal, the government claimed to have injected Rs108 billion in the KESC during last three years and its assets are now worth about Rs60 billion. "The real estate of KESC is worth more than Rs60 billion,'' asserted a senior business leader.

In its memorandum finalised in 2002, the Financial Adviser, Price Water House Coopers indicated staff levels at 11,224 until 2004 when a redundancy scheme is modelled.

Now that the utility has been privatised in 2005 the employees have expressed the fear of retrenchment in next one or two years and organized a protest hunger strike camp. The military management gave an assurance of maintaining staff level. But the redundancy model prepared by the Financial Adviser indicates to bring down staff level to 8,500. It assumes two months basic pay per year for the officers with a maximum of 40 months. For staff, four months basic per year is assumed capped at 80 months.

The report indicates Rs25.6 billion capital expenditure of which the government has taken up Rs12 billion system up gradation programme. The government is expected to continue this programme even after the privatization.