KARACHI, Sept 19: Delay in the implementation of the CCoP September 1 decision accepting the highest matching bid of Hasan Associates at Rs1.65 a share is creating uncertainty and triggering a spate of speculations and rumours in the market.

What was described as a “landmark privatization transaction” by the Federal Privatization Minister Dr Abdul Hafeez Sheikh in February 2005 auction of 73 per cent shares of the KESC is now fast turning into a scandal because of inordinate delay and the mysterious silence of the Commission, the minister and others, even though the CCoP headed by Prime Minister Shaukat Aziz gave the approval on September 1.

As a routine affair, the Privatization Commission should have issued an official release on the decision of CCoP on KESC deal and informed the public of the conditions, if there were any, attached with the decision. There were conflicting reports. One report suggested that CCoP had refused to accept the matching bid. But within 24 hours it was said that CCoP had accepted the matching bid and wanted the original members of the Hasan Associates to be given an opportunity to participate in the shareholding.

A loud whisper going around the business circles on Monday suggested that the issue was now being taken up by the Federal Cabinet on Wednesday. Those involved in matching the highest bid want an approval from the entire cabinet so that no one raises the question in future. But a well placed and authoritative source in Islamabad emphatically pointed out “the issue of the KESC privatization deal is certainly not coming up, at least in the next cabinet meeting of the federal cabinet scheduled on Wednesday. I have no idea if it ever comes up in next meetings of the cabinet,” he remarked. What was worrying him, however, was the “non stop bleeding of the KESC’’ that costs the exchequer heavily.

All privatization deals are processed by the Privatization Commission and approved by the Cabinet Committee on Privatization which is headed by the Prime Minister and include several federal ministers including the one who is relevant to the project. The Privatization Commission processed the highest matching bid, which was approved by the CCoP on Sept 1.

Efforts to reach the Federal Privatisation Minister—-four times—-by mobile phone at Islamabad on Monday from noon till evening failed to evoke any response. All the four calls were received by an attendant who noted down the telephone numbers. But the Minister never replied back. Similar efforts to contact the relevant persons involved in the privatization deal also proved futile.

But a few local businessmen who are watching closely the KESC privatization deal and are in touch with the government, Privatization Commission and the consortium that gave the highest matching bid hinted at the obstructions being made by certain quarters. The government, however, wants quick conclusion of the deal as “KESC is a bleeding entity that takes up an average of Rs14 billion from public tax every year.”

Issues involved in the KESC privatization deal emerge from the change of composition of the Hasan Associates consortium. The original consortium that participated in February 4 auction bid included 10 members in all. But the Consortium that decided to match the highest bid has a changed complexion.

It has now as leader the Al-Jomaih Group, a Riyadh based international conglomerate led by Mohammad Abdulaziz Jomaih. The group has investment stake in oil and gas, telecommunications, real estate and manufacturing. It now operates in Pakistan through its subsidiary KES Power Limited that has now the majority shareholding of the highest matching bid and will control and manage the KESC if the government gives a go-ahead signal.

There are two local groups -— Hasan Associates and Premier Mercantile Services who were in the original consortium. There are two technical partners who are GE and ABB. Siemens is O and M contractor.

What haunts the government is the fear of legal challenge from the previous members of the Consortium. For this, a written no objection certificates has either been obtained or is in process.

The Privatization Commission and the government will feel comfortable with written NOCs from the previous members of the consortium who decided to opt out from the highest matching bid.

The KESC was put to auction on February 4 in which a Saudi investors group offered the highest bid of Rs1.65 a share amounting to about Rs15 billion for 73 per cent shares. The bid was formally approved on February 6 by the CCoP and a letter of approval was issued more than two weeks later. The Saudi Group later backed out and Hasan Associates was given an opportunity to match the bid.