Senate Standing Committee on Industries and Production on Thursday recommended withdrawal of Heavy Electrical Complex (HEC) from privatisation list and upgradation of the plant to meet the demand of energy projects under the China-Pakistan Economic Corridor (CPEC). A meeting of the committee on Industries and Production presided over by Senator Hadayatullah also recommended that Cargill Holding, whose failure to deposit the amount led to cancellation of HEC deal, should be blacklisted and the Company and its Director should not be allowed to participate in any bidding process in future.
Chairman and members of the committee were of the view that there was no need to privatize the HEC because transformer demand is going to increase considerably due to energy projects under the CPEC. "There is a need to up-grade plants of the HEC and the company should have a plan of financial requirement to do so," said Senator Taj Haider. Other members of the committee supported his point of view. The government can arrange required finances for the company through a consortium of banks, etc, after a senior official of the Ministry stated that the HEC does not have finance to meet the orders of Wapda.
Joint Secretary Waqar Ali Khatran gave a briefing to the committee on performance of HEC and stated the company was established to manufacture transformers and generators and needs government patronage. He added the company manufactures heavy transformers and has made Rs 7.6 billion units and carried out repair jobs of Rs 773 million since inception. Khatran maintained, "earning of the HEC has increased to Rs 673 million during 2015-16 against Rs 374 million for the previous year with total capacity utilization of 94 percent and 20-25 percent increase in production".
He said last year HEC manufactured 30 transformers and now has Rs 561 million orders. "HEC is earning though commercial operation and despite difficulties, it has neither taken any grant from the government nor any bailout package," he added.
"We are in fifth attempt of HEC privatisation," stated official of the Privatisation Commission. According to him, "the company is on privatization list and that last attempt was the fourth one that failed to materialize."
Briefing the committee on handing over Heavy Mechanical Complex (HMC) to the Ministry of Defence, a Senior Joint Secretary Ministry of Industries and Production informed the committee that a summary was moved by Strategic Planning Division (SPD) to the Prime Minister seeking approval for the transfer HMC to SPD in December 2015. The proposal was supported by Ministry of MoI&P with a proviso that all the liabilities of HMC would be transferred to SPD and that service conditions of HMC employees, both serving and retired, would be protected. The same was agreed to by SPD; however, in addition to the transfer of HMC, provision of Rs 500 million was also requested.
The proposed transfer of HMC was endorsed by the Cabinet Division and PM's office referred the matter to Finance Division for consideration of the funds requested by SPD. He said the company was transferred to SPD in July 2016. Federal government's support to HMC for salaries and other essential expenditure up to June 2016 will not exceed Rs 500 million, inclusive of the amount of Rs 253 million already released on account of salaries of seven months (November 2015-May 2016).
The committee expressed dissatisfaction over compliance report presented by the Engineering Development Board (EDB) with respect to its recommendations about Auto Sector and decided to visit the plants to see whether the companies are operating their plants in full capacity. It was shocked to learn that some of them are reluctant to share their agreements with the committee.
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