The privatisation of the Heavy Electrical Complex (HEC) has entered into its final stages after a breakthrough has been achieved in several of the pending matters.
According to a press statement issued on Monday, different options for the determination of Reserve Price for the bidding of HEC shares are currently being considered by the Privatisation Commission (PC), before the bidding process is initiated with the approval of the federal cabinet. A breakthrough has been achieved in several of the pending matters related to employees and settlement of liabilities due towards the financial institutions.
The PC is ensuring that no further liabilities are added to the balance sheet of HEC while the Ministry of Industries and Production is also playing a positive role to retain the credit rating of the entity. Also, Power Division is in agreement that no adverse action is taken against HEC by any DISCO. The settlement of long-standing dues of KPEZDMC is another milestone that has been successfully achieved with the cooperation of the concerned stakeholders, said the statement. The privatisation of HEC has generated interest from a number of investors. The bidders have been prequalified by PC and the pre-bid meeting was also held in August 2021. Most of the issues raised by the pre-qualified bidders in the meeting were satisfactorily addressed.
It is expected that the privatisation of HEC will lead to the creation of positive sentiment for the overall privatization programme presently underway. Many other privatization transactions of larger ticket size and quantum are also queued up which include the two RLNG based Power Plants, Pakistan Steel Mills, Guddu Power Plant, and Nandipur Power Plant. The bidding of HEC is likely to be held within this quarter after the approval of the reserve price of bidding by CCOP and cabinet.
The HEC is a government-owned entity under the administrative control of State Engineering Corporation, the share of which is fully owned by the Ministry of Industries and Production. Located in Taxila, the Heavy Electrical Complex (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.
According to the statement, the privatisation is a very 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 by the Privatisation Commission to enable a level where the HEC transaction has eventually reached.
