Privatisation of Services International Hotel: Parliamentary panel questions bidding process

ISLAMABAD: The Senate’s Standing Committee on Privatisation on Monday raised questions on the bidding process for the privatisation of the Services International Hotel, Lahore, and called for its further probe.

The committee, which met with Senator Shamim Afridi in the chair, took a briefing from the official of the Privatisation Commission about the privatisation of the hotel. The secretary Privatisation Commission informed the committee that the privatisation of the hotel was in final stages and the matter was to be laid before the cabinet for final approval.

Bidding has taken place through an open auction. Two bidders submitted the bids for the reserved base price of Rs1.94 billion. The commission received one bid higher than the reserved base price amounting to Rs1.95 billion and the other one was below the reserved price and subsequently did not qualify.

The committee chairman questioned the officials regarding the process of privatisation as to how a bid was considered successful when minimum number of bidders were not there for auction to which the ministry officials answered that there was no legal issue with regard to the minimum number of bidders in an open auction. The ministry officials said the bidding was done as per law with complete transparency. Senator Sabir Shah said: “It is a commercial property and we believe that reserved base price of 1.94 billion rupees is very low.”

The committee members were of the view that the issue needs to be probed further. The committee chairman directed to write a letter to the cabinet in order to inform them about the reservations of the committee members on the issue. Discussion on the matter was deferred to be taken up again in the next meeting of the committee. The committee reconsidered the bill titled "The Privatisation Commission (Amendment) Bill, 2021” moved by the minister for privatization in the Senate sitting on June 23, 2021. The committee members received a detailed briefing from the ministry officials on the proposed amendments in the bill.

Senator Sabir Shah, while expressing his reservations on the bill, said: “Bypassing the cabinet and empowering an individual is against the norms. Amendments will result in withdrawal of collective wisdom. If we go ahead with these amendments, it would set a wrong precedent.” The ministry officials answered that the proposed amendments will not affect the process of privatisation. "We go to the cabinet three to four times during the whole process of privatisation. This is by no means limiting the powers of cabinet. The word government is mentioned in the Privatisation Act 83 times. We have just decided to replace the word in four places, which will give power to the prime minister to make appointments to the Privatisation Board."

As per the existing definition of the government and act we have to go to the cabinet for even small petty tasks such as account opening. These amendments are aimed at removing these bottlenecks, informed the officials from the Ministry of Privatisation. The committee, however, deferred the consideration of the bill after due deliberations.

The committee was also briefed on the privatisation of Pak-China Fertiliser Company, Haripur, KPK with regard to its present status, outstanding amount payable to government, reasoning for delay in its privatisation and expected date of its functioning, employee status and future plans of the government for the said fertiliser company.

Secretary Privatisation Commission, while briefing the committee members, said that “90 percent of the shares of PCFC were sold to M/S Schon Group vide sale agreement dated 26 May 1992, for total consideration sale price of Rupees 456.84 million. Of which 40 percent sale price was paid by the buyer amounting to 182.736 million rupees. The total outstanding sale amount till August 31, 2021 is Rs2.8 billion. There are multiple litigations going on regarding the fate of this property. The commission is currently perusing the case in Islamabad High Court."

Senator Fida Hussain apprised the committee members of the dismal situation on ground in Haripur of the said property. He lamented lack of action from the ministry officials regarding multiple attempts of encroachment and theft of scrap worth billions of rupees. He further expressed his discontent regarding the fate of employees who still have not received their due compensation even after 30 long years. Senator Sabir Shah also weighed in on the current status of the said property. He said: “It is our duty to protect public property and we will do whatever it takes to solve this issue.”

The chairman of the committee directed to summon the deputy commissioner Haripur in the next meeting of the committee along with complete details of the current situation on ground. The committee also deliberated upon the idea of setting up a sub-committee in order to visit the site and take count of the alleged mismanagement.