PC reopens SIH sell-off transaction

ISLAMABAD: The Privatisation Commission (PC) has reopened Services International Hotel (SIH) transaction as the hotel was allegedly sold to a party at a throwaway price, sources close to Minister for Privatisation told Business Recorder.

The incumbent Cabinet, sources said, had sought a report on the issue of privatisation of SIH, allegedly at a throwaway price. However, the Privatisation Commission has not shared the required information with the Cabinet.

The sources said, at a recent meeting of the Cabinet, one of the Cabinet members observed that the information had still not been presented.

The Minister for Privatisation noted that revaluation was being carried out and the requisite information would be shared with the Cabinet.

Available information indicates that the PTI Cabinet had also turned down the sale of SIH on the basis of proposed height and directed the Cabinet Committee on Privatisation (CCoP) to review its decision.

The government had approved reserve price of Rs2.250 billion for the land and building of Services International Hotel (SIH), Lahore.

Financial Advisers (FA) conducted the legal work with due diligence and transaction structure was approved by CCoP in August, 2020. Thereafter, six interested parties were pre-qualified in December 2020.

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The financial advisers presented the valuation of the SIH property as follows: (i) Hamid Mukhtar & Company presented the market value of land at Rs2,776,250,000 at a price of Rs 150,000,000 per Kanal whereas the proposed value of residual land was Rs 2,362,000,000 on the basis of Rs 150,000,000 per Kanal; (ii) Excel Services & Engineering (Pvt) Ltd also calculated market value of land at Rs2,276,250,000 on the basis of Rs 150,000,000 per Kanal; however, the value of residual land was calculated at Rs 2,220,472,126 on the basis of Rs146,000,000 per Kanal; (iii) Arch-e-Decon calculated value of land at Rs 2,198,780, 000 on the basis of Rs 145,000,000 per Kanal, while value of residual land was calculated at Rs 2,382,923,474 on the basis of Rs 157,000,000 per Kanal; (iv) Financial Advisors (Colliers & Elixir) presented total value of Rs2,108,000,000 on the basis of Rs139,000,000 per Kanal; however, price of residual land was calculated at Rs 2,097,013,763 on the basis of Rs 138,200,000 per Kanal.

The average value of land was Rs 2,214,820,000 on the basis of Rs 146,000,000 per Kanal whereas residual value of land was calculated at Rs 2,265,602,341 on the basis of Rs 147,800,000 per Kanal; (v) Hamid Mukhtar & Company presented total value of land and building at Rs 2,311,272,000, Excel Services & Engineering (Pvt) Ltd at Rs 2,326,300,000; and (vi) Arch-e-Decon, Rs 2,246,705,000 and Financial Advisors (Colliers & Elixir) valued land and building at Rs 2,145,540,000. The average value of land and building has been calculated at Rs 2,257.454,250.

The sources said, after detailed deliberations, the Board of Privatisation Commission unanimously recommended the reserve price of Rs. 2,250,000,000 (Rs 2.250 billion), ie, Rs. 148,319,050 per Kanal, for the Sale of Services International Hotel, Lahore (SIH) excluding the inventory items.

According to sources, the Cabinet Committee on Privatisation also approved the same price recommended by the PC Board.

The sources said, there were only two parties that submitted the bids, of which the bid of one party was less than the reference price, which was considered as non-responsive. The CCoP approved the sale of hotel to a party which some Cabinet members argued was not fair.

On September 21, when the minutes of CCoP were presented for ratification, the Cabinet did not approve the transaction and directed CCoP to review its decision.

However, later on the PTI Government approved the bid on the recommendations of the Committee, which termed the transaction transparent. Later on PC Board after consideration of auction proceedings, approved the successful/ highest bidder, ie, Faisal Town Pvt Ltd, Islamabad along with the bid price of Rs 1,951,718,500 .

Copyright Business Recorder, 2022