ISLAMABAD, Oct 7: The Competition Commission has decided not to withdraw an NOC issued to the Siemens for participating in the bidding for the Heavy Electrical Complex being held on Oct 13.
Had the NOC been withdrawn, Korea’s Iljin Electric Company would have been left as sole contestant for acquisition of 90 per cent shares of the HEC, together with its management control on “as is where is” basis.
The Privatisation Commission had made it mandatory for all parties interested in the acquisition of HEC to obtain an NOC. However, the commission received a complaint from Iljin Electric Company asking for withdrawal of the NOC issued to the Siemens on the ground that it had allegedly provided false or misleading information.
It had stated that if Siemens successfully acquires the HEC, it would be in a dominant position in manufacturing 132KV power transformers and would abuse this dominance to crowd out competitors.
The commission constituted an enquiry committee, comprising its chairman Khalid A Mirza and member Dr Joseph Wilson, which held a hearing on Sept 12 attended by the representatives of Siemens and Iljin.
The committee wanted to establish whether there was any ground in Iljin’s contention that the proposed merger between Siemens and the HEC would create or strengthen a dominant position, allowing the merged entity to raise prices above competitive levels without losing sales or if Siemens had indeed provided false or misleading information to secure the NOC.
The committee, subsequent to the hearing, examined the matter and decided that there was no evidence of dominance in the power transformer market in Pakistan by any one company at present and neither any dominance was expected as dynamics of the market showed considerable variability, taking into account domestic production and imports.
Therefore, no violation of Sections 3 and 11 of the Competition Ordinance, 2007, was foreseen.
The committee also found that Iljin could not unequivocally establish the fact that Siemens had obtained the NOC on incorrect or misleading information. For this reason, the enquiry committee recommended to the commission not to withdraw the NOC issued to the Siemens, nor to take any other action under the Competition Ordinance, 2007.
ABB (Pvt) Limited, Switzerland; Areva T & D Holdings Ltd, SA France; Pak Elektron Limited (PEL); Siemens (Pakistan) Engineering Company Limited, Karachi and Iljin Heavy Industries Company Limited, Korea had participated in the pre-bid moot on June 3 this year.
The HEC is one of the industrial units of the State Engineering Corporation (SEC) engaged in the manufacture of power transformers of different types (total annual capacity 3000 MVA) with primary voltage rating of 66 and 132 KV).
It undertakes repair and refurbishment of old and damaged power transformers up to 500 KV.
The HEC was incorporated as a private limited company in 1991 and commenced full-scale commercial operation in 1997.
Located at the Hattar Industrial Estate near Islamabad, the HEC is spread over an area of 81.379 acres. A total of 63 acres of land is included in the transaction, out of which 20 acres is non-core land for expansion.
Major clients of HEC products include Wapda, its corporatised entities and the KESC.
According to the Privatisaton Commission, the purchaser shall continue to operate company’s manufacturing facility and shall not in any way abandon, cease to operate or otherwise shut down its existing facility. The purchaser will not in any form or manner dispose of, alienate transfer any or all land in the name of the company without the prior consent of the Privatisation Commission. The cost of golden hand-shake scheme for permanent workers and voluntary separation scheme for executives would be shared equally between the new buyer and the PC.
The bidder shall bid on the basis of audited accounts of June 2006 and may also factor the latest un-audited accounts available prior to the bidding.