April 5, 2006	Wednesday	Rabi-ul-Awwal 6, 1427

ISLAMABAD, April 4: The Privatization Commission on Tuesday announced that it had cancelled a letter of acceptance (LoA) issued to Ibrahim Fibres and forfeited its Rs350 million earnest money for default in purchasing Pak-American Fertilizers Ltd at a Rs19.99 billion bid.

It said necessary legal and administrative actions had also been initiated against Ibrahim Fibres to recover Rs3.9 billion difference from the second highest bid of Rs16.11 billion from Azgard-9 and Jehangir Siddiqui Securities.

Meanwhile, a letter of acceptance in favour of the second highest bidder — AZGARD-9 and Jehangir Siddiqui Securities Consortium — for the strategic sale of Pak-American Fertilizers Ltd (PAFL) at their offer of Rs16.11 billion at the rate of Rs537 per share has also been issued.

The Cabinet Committee on Privatization (CCoP) had given approval to the proposal of the Privatisation Commission on March 31 in this regard. The second highest bidder will deposit 25 per cent of their offer of Rs16.11 billion within 14 days and the remaining 75 per cent amount less earnest money in 60 days from the date of the issuance of LoA.

Privatization Minister Awais Ahmad Khan Leghari told reporters that the government had “improved” the privatization law recently under which the second bidder was not required to be asked to match the highest bid because the difference in bidding amount had to be recovered form the defaulting bidder.

He, however, agreed that the change in law should have been widely publicized by the government which was not done, although it had been discussed in detail with the bidders during the privatization process.

PAFL is the first fertilizer manufacturing concern in Pakistan. It was established in 1959. The bidding for the privatization of PAFL was held in Karachi on February 28 this year.

PAFL is located at Iskanderabad (Daudkhel), Mianwali, and produces 1,050 tons of urea per day. It is the subsidiary of National Fertilizer Corporation of Pakistan (NFC).

Japan Bank of International Cooperation (JBIC) provided loan for setting up the fertilizer plant. The plant was commissioned in 1999. The old plant was closed down in 1997 and a new ammonia/urea plant commenced commercial production in 1999.

The new plant is designed to produce 600 tons per day ammonia and 1,050 tons per day urea using natural gas as feed and fuel. The company possesses over 11,481 kanals of land, comprising 6,432 for factory, 2,818 for housing colony and 2,230 for experimental farm.