ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved Rs157.7 million for the Heavy Electrical Complex (HEC) to pay the salaries of its employees, as well as to meet operational expenses and mark-up payment to Bank of Khyber (BoK).
The Ministry of Industries and Production (MoIP) submitted a summary to the ECC and stated that the HEC is a power transformer manufacturing company, which was offered for sale by the Privatisation Commission after a competitive bidding process in February 2022. Subsequently, IMS Engineering (Private) Limited made the highest bid of Rs1.4 billion and deposited the initial payment.
As per the Share Purchase Agreement (SPA), all additional land other than the factory premises is to be treated as an “excluded asset”. Therefore, 30.8 kanals, located in Taxila, needed to be fully separated from the HEC prior to the transfer of shares to the prospective buyer.
Thus, to safeguard the interest of the federal government, the ECC decided on 14th November 2022 to transfer the HEC land to the Strategic Plan Division (SPD). The demarcation of the land was carried out and “Fard Bai” of the whole 30.08 kanal was obtained on 4th April 2023, which was shared immediately with the SPD for onward mutation of the land.
The ECC was told that the SPD has been delaying about the payment to be paid as fee for the mutation of the HEC land. Given the impasse, on 4th April 2023, a meeting held in Prime Minister’s Office decided that the SPD should mutate the land within a week, or in the case of any delay on the part of the SPD, MoIP will mutate the HEC’s land in favour of State Engineering Corporation (SEC), as an interim measure. The meeting also decided that the MoIP should move a summary for the ECC for the provision of requisite funds for transfer of the HEC land to SEC.
The MoIP initiated a draft summary for the ECC, requesting for allocation of funds to pay the mutation fees of Rs8 million and send it to the Finance Division and the Privatisation Division for comments.
The Finance Division’s response was that the MoIP may arrange funds of Rs8 million from its own allocated budget; however, in case of shortfall of funds, the Finance Division will provide funds from the anticipated savings to the extent of Rs8 million.
The Privatisation Commission (PC) responded that it had been consistently emphasizing that the title of the HEC land in Taxila may be transferred to any public sector organisation as may be deemed appropriate by the federal government to enable the conclusion of the privatisation of the HEC.
The MoIP has informed the Finance Division that the anticipated savings during the current financial year 2022-2023 have already been utilised to meet the shortfalls for employee-related expenses. Therefore, the MoIP does not have the requisite funds to proceed in this case.
The ECC was further told that throughout this process, the SPD was kept in the loop, and requested to pay the mutation fees for transfer of land and in a meeting held on 1st June 2023, the PC reiterated that the land should be transferred in the name of SEC, in case the SPD falls to pay the amount for mutation.
The MoIP has been pursuing the payment of salaries and mark-up with the Finance Division and the Finance Division has agreed to provide funds through a technical supplementary grant (TSG) for mark-up and salaries to the HEC till June 2023, with the condition that no further funds will be provided.
The Finance Division also requested the MoIP to submit a revised summary for the ECC for obtaining TSG and to approach the Privatisation Commission to finalise HEC transaction by June 2023. The meeting was told that the ECC’s decision of 14th November has not yet been implemented.
Copyright Business Recorder, 2023
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