Govt to hold bidding of HEC during current fiscal quarter

ISLAMABAD: The federal government will hold the bidding of Heavy Electrical Complex (HEC) during the current fiscal quarter (Q2FY22) as the state owned entity’s (SOEs) privatisation has entered its final stages.

As per details, the Privatisation Commission will conduct the bidding of HEC after the approval of a reserve price of bidding by the Cabinet and Competition Commission of Pakistan (CCOP).

HEC is a government owned entity under the administrative control of State Engineering Corporation (SEC), the shares of which are fully owned by the Ministry of Industries & Production.

Located in Taxila, 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. 

Currently, different options for determination of reserve price for the bidding of HEC shares are being considered by the Privatisation Commission.

Importantly, a breakthrough has been achieved in several of pending matters related to employees and settlement of liabilities due towards financial institutions. 

The commission is ensuring that no further liabilities are added to the balance sheet of HEC, the Ministry of Industries & Production is also playing its role to retain the entity’s credit rating while the power division is making sure that no adverse action is taken against HEC by any DISCO. 

Further, settlement of long-standing dues of KPEZDMC is another milestone which has been successfully achieved with the cooperation of the concerned stakeholders. 

The privatisation of HEC has generated interest from a number of investors. The bidders were pre-qualified by the commission in a pre-bid meeting held in August.

Most of the issues raised by the pre-qualified bidders in the meeting were satisfactorily addressed. It is expected that the privatisation will lead to the creation of a 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 two RLNG based power plants, Pakistan Steel Mills (PSM), Guddu Power Plant, and Nandipur Power Plant. 

Privatisation is a 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 to bring to come to the level where the HEC transaction has reached.