The Heavy Electrical Complex privatization process has entered into its final stages and Privatisation Commission is making some final checks before the bidding.
Currently, different options for the determination of Reserve Price for the bidding of Heavy Electrical Complex shares are being considered by the Privatization Commission (PC) before the bidding process is initiated with the approval of the Federal Cabinet.
Importantly, a breakthrough has been achieved in several of the pending matters related to Employees and settlement of liabilities due towards the financial institutions. PC is ensuring that no further liabilities are added to the balance sheet of HEC while the Ministry of Industries & Production is also playing a positive role to retain the credit rating of the entity.
HEC is a Government-owned entity under the administrative control of State Engineering Corporation, the shares of which are fully owned by the Ministry of Industries & Production/Federal Government. Located in Taxila, 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.
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.
The privatization 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 privatization of HEC will lead to the creation of positive sentiment for the overall privatization program presently underway. Multiple other privatization transactions of a 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.
Privatization is a very thorough process wherein extensive due diligence and due care are involved in each phase. Starting from the financial, legal, and technical analysis of the entity being privatized 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 privatization by the Ministries are loss-making and have complex financial and legal issues, which take extensive efforts by Privatization Commission to bring to a level where the HEC transaction has eventually reached.