ISLAMABAD: The Board of Privatisation Commission (PC) has reportedly deferred its decision on approval of Reserve Price of Heavy Electrical Complex (HEC) after some members raised objections on the timing of the move, well informed sources in Ministry of Industries and Production told Business Recorder.

On September 21, 2021, the PC presented the proposal before the Board with the approval of Minister for Privatisation, Mohammed-mian Soomro. Privatisation Commission proposed reference price at Rs 81.08 per share of HEC for 96.6 per cent (114,100,012) share of Federal Government.

HEC was incorporated in 1991 and started its commercial operations in 1998. The prime business of the company is to prepare high voltage electric transformers used by the power distribution entities.

The company is owned by State Engineering Company (SEC) working under the administrative control of Ministry of Industries and Production. HEC manufactures power transformers of 132 KV and 66 kV with unit ranging from 6.3-40 MVA – high voltage along with services for testing, repairs and onsite commissioning of transformers.

Earlier, an attempt to privatize the HEC was made in 2014; however, due to poor response the process was annulled in December 2014. The last attempt to privatize HEC was carried out in March 2015. Three parties were pre-qualified out of which only one party deposited the earnest money. Later, CCoP approved the bid of M/s Cargill Holding Limited but privatisation could not materialize as the successful bidder never issued the requisite cheque. The bidder’s earnest money of Rs25 million was forfeited.

CCoP, in its meeting held on August 08, 2019 placed HEC again on the active privatisation list. The Financial Advisor consortium led by M/s Bridge factor and NBP was appointed by PC in January 2020.

CCoP, in its meeting held on November 16, 2020 approved the transaction structure of HEC wherein the sale of all (96.6 per cent) government shares in HEC was approved.

The CCoP’s decision was ratified by the Cabinet in its meeting held on December 1, 2020. Later, CCoP in its meeting held on March 18, 2021 directed MoIP to resolve pending issues including the matters related to HEC employees’ dues, liabilities towards Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC), validity of type testing licence and transfer of land located in Taxila presently in the name of HEC.

Pursuant to the Privatisation Commission (Valuation of Property) Rules, 2007, following methodologies are allowed for valuation for privatization: (i) Discounted Cash Flow(DCF) and its variants; (ii) balance sheets methodologies and their variants; (iii)transaction multiple methodologies and their variants; and (iv) asset valuation methodologies and their variants.

The sources said PC will resubmit the proposal after some time as some members of the Board were unhappy with submission of proposal after just a few months.

Copyright Business Recorder, 2021

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