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ISLAMABAD: The privatisation of government-owned Heavy Electrical Complex (HEC) has entered into its final stages. Currently, various options for determination of reserve price for the bidding of the HEC shares are being considered by the Privatisation Commission (PC), before the bidding process is initiated with the approval of the Federal Cabinet.

Breakthrough has been achieved in several of the pending matters related to employees and settlement of liabilities due towards the financial institutions.

The PC is ensuring that no further liabilities are added on the balance sheet of the HEC, while the Ministry of Industries and Production is also playing its positive role to retain credit rating of the entity. Also, the Power Division is in agreement that no adverse action is taken against the HEC by any DISCO.

Settlement of long-standing dues of the KPEZDMC is another milestone, which has been successfully achieved with the cooperation of the concerned stakeholders. The privatisation of the HEC has generated interest from a number of investors. The bidders have been pre-qualified by the PC and the pre-bid meeting was also held in August 2021.

Most of the issues raised by the pre-qualified bidders in the meeting were satisfactorily addressed. It is expected that the privatisation of the HEC will lead to creation of positive sentiment for the overall privatisation programme, presently, underway.

Many other privatisation transactions of larger ticket size and quantum are also queued up, which include the two RLNG-based power plants, Pakistan Steel Mills, Guddu Power Plant, and Nandipur Power Plant.

The bidding of the HEC is likely to be held within this quarter after the approval of reserve price of bidding by the CCoP and the Cabinet.

Privatisation is a very thorough process, wherein, extensive due diligence and due care is involved in each phase. Starting from the financial, legal, and technical analysis of the entity, being privatised to its marketing, inviting interests of potential bidders, outreaching to potential investors and most importantly clearing the encumbrances, which could adversely impact the transaction.

Most of the entities offered for privatisation by the ministries are loss making and have complex financial and legal issues, which take extensive efforts by the Privatisation Commission to bring to this level, where the HEC transaction has eventually reached.

The HEC is a government-owned entity under the administrative control of State Engineering Corporation, the shares of which are fully owned by the Ministry of Industries and Production/Federal Government. Located in Taxila, the HEC started its commercial operations in 1998.

The prime business of the HEC is to prepare high voltage electric transformers used by the power distribution entities along with services for testing, repairs, and onsite commissioning of transformers.

Copyright Business Recorder, 2021

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