SIH: CCoP to take final decision on sell-off process on fresh advice basis

ISLAMABAD: The Cabinet Committee on Privatisation (CCoP) is to take a final decision on privatisation process of Services International Hotel, Lahore (SIH) on the basis of fresh advice from the Ministry of Law and Justice as Privatisation Ministry opposes any “deviation” from earlier assessment, well informed sources told Business Recorder.

Sharing the details, the sources said, on December 26, 2022, Ministry of Privatisation briefed the CCoP presided over by Finance Minister Ishaq Dar that an extensively advertised open public auction was held on August 26, 2021 wherein M/s Faisal Town (PVT) Limited offered highest bid of Rs 1,951,718,500 for purchase of Services International Hotel, Lahore (SIH) that was approved by the CCoP in its meeting held on September 10, 2021 and ratified by Federal Cabinet on October 27, 2021.

The process was successfully completed and Letter of Acceptance (LoA) was issued on November 2, 2021.

The buyer 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 its further directions, the details of SIH transaction were presented to the CCoP, in its meeting held on June 24, 2022.

The CCoP constituted a sub-committee under the chairmanship of minister for Privatisation with representatives from Finance Division, Law & Justice Division and secretary Privatisation Commission as members, to review the SIH transaction.

The sub-committee after detailed deliberations decided to conduct a fresh valuation of the property through an independent valuer from Punjab on the Panel-l list of Pakistan Banks’ Association. Accordingly, M/s AJ Valuers Associates (Pvt) Limited was selected under PPRA rules on July 28, 2022.

The valuer submitted its 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 sub-committee after due deliberations concluded that the previous valuation was reasonable at the time it was auctioned.

Ministry of Privatisation further informed that the report of the subcommittee was presented before the CCoP in its meetings held on September 7, 2022 and September 13, 2022, whereby PC was directed to re-submit the summary to the CCoP after seeking inputs from Law and Justice Division.

Accordingly, comments were sought from Ministry of Law and Justice, which suggested that fresh valuation matter be referred to the Federal Investigation Agency (FIA) to deeply probe and to determine that the valuation was carried out as per the prevailing market rate and in conformity with the proposed structure which can be constructed on the site.

In the meantime, the buyer, M/s Faisal Town (Pvt) Limited, issued a legal notice on October 4, 2O22, due to delay in signing of sale deed, transfer of title and handing over property to him as failure to do so would invoke seeking necessary remedies from the courts.

The CCoP discussed the case threadbare. The secretary Privatisation Division stated that due diligence was carried out while privatising SIH and due process had been followed in accordance with PC Ordinance, 2000.

It was further stated that successful bidder had deposited full purchase price of SIH and the transaction stood completed. It was added that at this belated stage, if the said transaction was reverted, it shall not only cause negative impact on privatisation programme but could also be challenged.

The secretary Law and Justice Division observed that transaction was conducted in the prescribed manner, fulfilling all the requirements and there were no legal lacunae therein.

The SAPM on Government Effectiveness observed to refer the matter to the Law and Justice Division to review its advice for fresh valuation of SIH by FIA as it has no mandate for valuation of the property unless any irregularity had been pointed out in the transaction.

The SAPM Finance endorsed the views of SAPM on Government Effectiveness and stated that FIA was an investigating Agency and it had no competency in valuation of the property.

The chairman CCoP observed that since transaction of SIH had been done in accordance with prescribed procedure, therefore, there was a dire need that Law and Justice Division should review its earlier advice on the transaction and confirm whether privatisation process was carried out in accordance with prescribed privatisation laws/rules/procedure or otherwise.

After discussion, the CCoP directed Ministry of Privatisation to refer the case to Law and Justice Division for its review and to confirm whether due privatisation process of SIH was carried out in accordance with prescribed privatisation laws/ rules/procedure and submit a report there on within a week to the CCoP for consideration.

Copyright Business Recorder, 2023