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ISLAMABAD: The National Assembly’s Standing Committee on Privatisation on Thursday sought a report on the downfall of the public sector entity, Heavy Electric Complex (HEC), which is under the process of privatisation.
A meeting of the committee chaired by MNA Syed Mustafa Mahmud recommended that the bidding process of HEC should be transparent in all respect.
HEC was put on active privatisation list in August 2019 and the Cabinet Committee on Privatisation had approved sale of all (96.6 per cent) government-owned shares. The Privatization Commission has invited an expression of interest and asked investors to submit the same by Feb 9.
The additional secretary of the industries and production ministry informed the committee that HEC was established by the government to manufacture power transformers exclusively for Wapda and KESC then dependent on imported transformers.
The public sector entity also has an unmatched elaborate setup for rehabilitation of heavy power transformers. HEC earned profits in seven out of 15 years and earned substantial profits in 2007 and 2008. The current downturn of the company started from February 2017 when power distribution companies (Discos) stopped placing orders due to complaint by a foreign competitor on type testing of HEC power transformer at a lab of the National Transmission and Despatch Company (NTDC) in Rawat.
The NA committee was informed that in the initial stage the government had pumped less working capital into the company. The orders for equipment were mostly without advance, price escalation was not allowed and payments by Discos against HEC supplies were delayed.
Moreover, an amount of Rs382 million has been deducted by Wapda/NTDC/Discos on account of LDs. Substantial amount remains stuck up with the Federal Board of Revenue on account of income tax and sales tax refunds amounting to Rs239m receivable on June 30, 2020, while operating and financial results of HEC saw fluctuating trends.
The committee also desired to provide criteria for privatisation of government entities and recommended an in-camera briefing on Roosevelt Hotel in New York in the next meeting.
Published in Dawn, January 22nd, 2021
