April 9, 2006	Sunday	Rabi-ul-Awwal 10, 1427

ISLAMABAD, April 8: Privatisation and Investment Minister Awais Ahmed Khan Leghari on Saturday said that he had asked the Privatisation Commission to issue letter of acceptance (LoA) for the disinvestment of Pakistan Steel in case the highest bid was above the reference price determined by the CCoP.

He said that all standard procedures were observed before and after the bidding. The privatisation of Pakistan Steel was among the most transparent and successful transactions, he maintained.

The minister was speaking to media representatives, says a press release.

The Privatisation Commission advertised for the appointment of financial adviser on April 1 and received 18 expressions of interest, while only nine parties submitted their technical and financial proposals. As a result of evaluation only six parties were qualified and the highest ranked party, Citigroup Global Markets, was appointed as financial adviser for handling PS privatisation. Citigroup was associated with technical consultants i.e. Corus Consultants, UK.

In reply to a query, the minister clarified that as far as land evaluation was concerned it might be kept in mind that the plant had been sold as a going concern. Although the figure of land could not be worked out separately for a piece of land measuring 4,457 acres, yet it was above the going rate of land being given to the National Industrial Park (NIP) out of the Pakistan Steel land i.e. Rs3 million per acre for developed and Rs1.5 million per acre for undeveloped lands.

He added that out of 4,457 acres of land, the Core Steel Plant covered only 1,034 acres. Some 1,733 acres was for slag dumping, slag granulation, skull breaking, etc. However, it was ensured through the share purchase agreement that the steel making process should continue and in case of default the land should revert to the province.

The minister stated that standard methods used for valuation were discounted cash flow (DCF) basis, comparable companies analysis and precedents transaction methodology.

The amount of $362 million received from the highest bidder for a 75 per cent equity stake (or $483 million on 100 per cent basis) reflected the value of Pakistan Steel on a going concern basis and its ability to generate cash flows in the future taking into account the substantial investments, he said.

The minister said that the amount received was higher than the approved rate and could not be termed a throwaway price. “The Privatisation Commission was bound under its rules and regulations not to disclose the reference price of any entity at any forum.”

Mr Awais said all the phases of transaction i.e. inviting EoIs, pre-qualification, due diligence by investors, pre-bid conference and bidding were widely publicised. Those unable to participate due to failure of submitting earnest money of basic processing fee had missed the train, he said.

The minister said that certain individuals with vested interest were suggesting new and out of process offers and termed it inappropriate, unjustified and not transparent.

“The government considered the employees of public sector entities as important and strong stakeholders and we offered the golden handshake scheme to the interested workers to ensure that they should not be left high and dry,” he stated. He said that financial impact of GHS/VSS for the employees of Pakistan Steel was Rs15.6 billion, which was unprecedented in the privatisation history of the country.