ISLAMABAD, March 31: The government on Friday decided to take Ibrahim Fibres to the court to recover Rs3.9 billion for backing out of Rs19.99 billion sell-off deal of Pak-American Fertilizers Limited (PAFL), a senior official told Dawn.

The Cabinet Committee on Privatization (CCoP) took the decision here on Friday at a meeting presided over by Prime Minister Shaukat Aziz.

The CCoP also authorized the Privatization Commission (PC) to issue a fresh letter of acceptance (LoA) to the second bidder-AZGARD-9 and Jehangir Siddiqui Securities Consortium at their offer of Rs16.11 billion at the rate of Rs537 per share.

PC Secretary Tehsin told Dawn that the government had forfeited the Rs350 million earnest money of Ibrahim Fibres Limited and had decided to take the bidder to the court to recover the difference the government lost owing to the backing-out of Ibrahim Fibres in the final stage.

Asked as to why the government did not ask the second bidder to meet the highest bid as per the past precedents and the privatization law, the secretary said the second bidder could not be asked to do so but he did not explain why.

The second bidder would be offered to takeover the PAFL at a bid it had offered in the bidding and was about Rs3.9 billion lower than the highest bid. He said the highest bidder had, perhaps, made an unrealistic bid of Rs19.99 billion.

He confirmed that a delegation of Ibrahim Fibres Limited had met the prime minister and requested to be bailed out because of a family dispute over the PAFL transaction. However, the secretary said he (Tehsin) did not agree to sign any concession to a group that spoiled the privatization policy.

It may be recalled that it took the privatization commission about six months to persuade the Hassan Associates-led consortium to match the highest bid to takeover the Karachi Electric Supply Corporation when its first bidder backed-out of the deal.

An official statement said the CCoP approved the proposal of the commission to cancel the LoA of Ibrahim Fibres who had failed to fulfil the obligations for the purchase of PAFL.

“The CCoP also directed the PC to initiate necessary legal and administrative actions as provided in the bidding documents,” said the statement.

The committee also approved the process of appointment of lead manager for placement of Global Depository Receipts (GDR) of Oil and Gas Development Company Limited.