THE government has planned to auction luxury cars owned by the federal government. In this regard, the Prime Minister’s Office has placed advertisements in the print media to inform the general public that the auction will take place on Sept 17, 2018. As many as 102 cars, of which 36 have been manufactured abroad, are to be sold with the aim of obtaining a price above the current market-value. The advertisements in this regard refer to the Procurement Rules 2004 for the acceptance or rejection of bids.

In fact, the auction has no nexus with the Procurement Rules. In the current case, the relevant legal framework is provided under the Privatisation Ordinance, 2000. This requires that moveable properties owned by the federal government be sold only through the Privatisation Commission of Pakistan upon reference by the federal cabinet, after determination of a fair valuation of asset for the purpose of fixing a reserve price.

A challenge the government is likely to face on the day of auction is the market value of the cars, a benchmark that may be given to bidders as a base price. It appears from the terms of reference given in the advertisements that the market value of the cars has been fixed by government officials. Considering that these cars are being sold to promote austerity, the attempt would be made to sell the cars at maximum prices, not necessarily reflecting the actual market value.

For a successful auction transaction, it is imperative that an independent analysis be conducted for the determination of market value, to give confidence to potential bidders. The government should consider evaluating the base price of these cars objectively to ensure fairness of the process and to fix a realistic market price. An independent and capable evaluation expert/firm should be engaged so that cars are not sold at a throwaway price, either. Having an accurate market value is not only mandatory for the purpose of an auction, it will also rule out the possibility of collusion by bidders.

Muhammad Saqlain Arshad
Lahore

Published in Dawn, September 13th, 2018