ISLAMABAD: Stunned over non inclusion of sales tax refund of Rs 191 million and other liabilities in the total value of Heavy Electrical Complex (HEC), the Senate Finance Committee, directed the Finance Ministry to ensure transparency in the privatization of HEC.
Sales tax refund of Rs 191 million is pending with the Federal Board of Revenue (FBR) over the year as HEC has been paying sales tax on the sale, exports of its products since long.
The Heavy Electrical Complex (HEC) was established to produce power transformers required for the village electrification programme through expansion of existing electricity transmission and distribution network.
In the previous meeting Senate Finance Committee formed a sub-committee with a mandate to prepare recommendations to ensure transparency in the privatization of HEC.
Members Aysha Raza Farooq, Mohsin Aziz and special invitee Saeed Ghani raised objections that company was being privatized on throwaway price without proper evaluation of the assets and liabilities. They also raised objections on the privatization process with observations that government placed the entity on the privatization list as the project was completed.
Therefore, committee members sought meeting minutes prepared at the time of placing this entity in the list of proposed entities for the privatization and decided to invite the parent ministry to brief the committee on the said issue.
It is pertinent to note here that four bids had been made for the privatization of HEC. It was presented for privatization for the first time in 1997, however, in March this year, the Cabinet Committee on Privatization accepted Cargill Holdings Limited Company’s bid for acquisition of HEC at a meager price of Rs250 million.
It was a negotiated sale, as the board of Privatization Commission had originally set the minimum price at Rs500 million. Deloitte Pakistan, the financial advisor for the transaction, had valued the company in the range of Rs1.248 billion and Rs1.475 billion.
However, in June this year, government cancelled privatization deal for Heavy Electrical Complex (HEC) after the Rs225-million cheque deposited by Cargill Holdings Limited was dishonored. The government kept the Rs25 million that the buyer had deposited as earnest money as a penalty.
