ISLAMABAD: The controversial privatisation of Services International Hotel (SIH) in Lahore continues to remain incomplete despite the hotel’s buyer already having paid the purchase price in full.
While the valuation of the property by an independent valuer from Punjab through Federal Investigative Agency (FIA) have also been completed, top officials at the Ministry of Privatisation and members Cabinet Committee on Privatisation (CCoP) are creating roadblocks for a smooth transition, informed an inside source who wishes to remain anonymous.
The Privatisation Commission (PC) had given approval for the privatisation of the hotel that is on prime real estate in Lahore August 2021 at just Rs2 million above the downward revised minimum price of Rs1.94 billion.
The price at which the PC board allowed to sell the Services International Hotel – a over 15 kanal 3 marla property located at Mall Road Lahore, was Rs300 million lower than originally approved price of Rs2.25 billion by the PC board in March 2021. However, subsequently, the PC downward revised the minimum price to Rs1.949 billion in June this year.
Despite 15 months to the issuance of Letter of Acceptance (LoA), the privatisation of Services International Hotel (SIH) Lahore is still incomplete.
According to details learned by Profit, an extensively advertised open public auction was held on August 26, 2021, in which Faisal Town (Pvt) Limited offered the highest bid of Rs 1,951,718,500 for the purchase of SIH in Lahore. The bid was approved by the Cabinet Committee on Privatisation (CCoP) in a meeting held on September 10, 2021, and ratified by the federal cabinet on October 27, 2021. The relevant process of permissions and documentation was completed and LoA was issued later in the year on November 2, 2021. The buyer also deposited the full payment on January 6, 2022. Subsequently, an update was provided to the Prime Minister’s Office on privatisation in June, 2022, and on further directions the details of SIH transaction were directed to the CCoP in a meeting held on June 24, 2022.
The sub-committee under the chairmanship of Abid Hussain Bhayo, the Minister for Privatisation, and included representatives from Finance Division, Law and Justice Division and Secretary, Privatisation Commission to review the SIH transaction. After detailed deliberations, the sub-committee decided to conduct a fresh valuation of the property through an independent valuer. The valuer submitted the valuation report on August 15, 2022 and assessed the fresh value of Rs 1,951,076,000 adopting ‘Market Value Approach’ and Rs 1,461,000,000 based on ‘Residual Land Value’ or ‘Discounted Cashflow Method’. The valuation was sent to FIA for review after which the sub-committee confirmed it.
On the other hand the buyer, Faisal Town (Pvt) Limited, issued a legal notice on October 4, 2022, for delaying the signing of sale deal and transfer of title.
The CCoP discussed the case in detail in the last week of December 2022 in which the secretary of Privatisation Division highlighted that due diligence was carried out while privatisation process of the SIH in accordance with Privatisation Commission Ordinance of 2000. It was added that if at the current stage the transaction was reverted it would not only cause a negative impact on the privatisation programme but the deal could also be challenged by the buyer. The secretary of Law and Justice Division observed that the transaction was conducted in the prescribed manner, fulfilling all the requirements and there were no legal lacuna found. However, the SAPM on Government Effectiveness raised objection on the its review by the FIA as it has no mandate for the valuations of property and suggested Law and Justice Division to review.
The forum directed Ministry of Privatisation to refer the case to Law and Justice Division for review and confirm whether due privatisation process of SIH was carried out in accordance with prescribed privatisation laws and submit a report there on the within a week to the CCoP for consideration.
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