ISLAMABAD: The Cabinet Committee on Privatisation in its meeting chaired by Finance Minister, Senator Ishaq Dar here on Thursday, approved strategic sale of 97 percent shares of Heavy Electrical Complex (HEC) to Cargill Holdings Ltd. for Rs.905 million, far in excess of the reserve price set by the Privatization Commission Board and the Cabinet Committee on Privatization. The Government of Pakistan retains 3 percent of the shares.

Cargill’s offer also assumes liabilities of Rs 435 million, Rs 250 million in cash ‘up front’ and, in addition, another Rs 30 million to cover employee gratuity and provident fund obligations. Finally, Cargill will forego tax benefits associated with five years of losses amounting to Rs.190 million.

Cargill also has stated its intention to market abroad thereby earning, in time, foreign exchange.

“The net to the Government of Pakistan is Rs. 905 million,” said Mohammad Zubair, Chairman, Privatization Commission (PC) while briefing the CCOP. Zubair added that in three previous attempts agreement with a qualified investor had not been possible.

In 2006-07, four investors initially expressed interest, two interested parties pre-qualified, but neither put up ‘earnest money.’

In 2011-12, four parties expressed interest, however, none met pre-qualification criteria apart from one which failed to deposit the earnest money after conducting due diligence.

Again, in 2013 three parties pre-qualified, only two conducted due diligence, but neither deposited the earnest money required after conducting the due diligence due to the weak condition of the company.

“The earlier failed attempts to privatize the company is a statement of HEC’s poor condition,” Zubair said. “We are pleased to have a qualified buyer of Cargill’s calibre and have agreed to such favourable terms,” Zubair remarked.

Finance Minister Ishaq Dar on this occasion said that he had always advocated observance of complete transparency in the privatization process and desired that employees interest should be accorded due importance. These principles are to be followed in letter and spirit in all transactions to be carried out by the PC, the Minister added.

Federal Minister for P&NR, Shahid Khaqan Abbasy, Commerce Minister, Khurram Dastgir, Advisor Finance Division, Rana Assad Amin, Chairman Privatization Commission, Mohammad Zubair, Secretary Privatization Commission, Ahmed Nawaz Sukhera and other senior officials attended the meeting.—PR