ISLAMABAD: The Cabinet Committee on Privatisation on Thursday approved strategic sale of 97 per cent shares of Heavy Electrical Complex (HEC) to Cargill Holdings Ltd for Rs905 million.

The meeting, headed by Finance Minister Ishaq Dar, noted that the offer is in excess of the reserve price set by the Privatisation Commission Board (PCB) and the Cabinet Committee on Privatisation (CCoP). The government of Pakistan retains 3pc of the shares.

Cargill’s offer also assumes liabilities of Rs435m, Rs250m in cash ‘up front’ and, in addition, another Rs30m to cover employee gratuity and provident fund obligations. Finally, Cargill will forego tax benefits associated with five years of losses amounting to Rs190m.

“The net payment to the government of Pakistan would be Rs905m,” said Mohammad Zubair, Chairman, Privatisation Commission (PC).

Mr Zubair added that in three previous attempts, agreement with a qualified investor had not been possible.

In 2006-07, four investors initially expressed interest, two interested parties pre-qualified, but neither put up ‘earnest money.’

In 2011-12, four parties expressed interest, however, none met pre-qualification criteria apart from one, which failed to deposit the earnest money after conducting due diligence.

Again in 2013, three parties pre-qualified, only two conducted due diligence, but neither deposited the earnest money required after conducting the due diligence due to the weak condition of the company.

“The earlier failed attempts to privatise the company are a statement of HEC’s poor condition,” Zubair said.

“We are pleased to have a qualified buyer of Cargill’s calibre and have agreed to such favourable terms,” Zubair remarked.

According to an official statement, the finance minister said that he had always advocated observance of complete transparency in the privatisation process and desired that employees interest would be accorded due importance.

These principles are to be followed in letter and in spirit in all transactions to be carried out by the PC, the minister added.

Published in Dawn, March 27th, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play