A cabinet body on Friday approved the sale of a government-owned hotel at a low price of Rs1.96 billion but did not endorse a proposal to delist State Life Insurance Corporation (SLIC) from the privatisation list.
The Cabinet Committee on Privatisation (CCOP) approved a summary to sell Services International Hotel, Lahore at the highest bid of about Rs1.96 billion, according to a statement issued by the Ministry of Finance. Finance Minister Shaukat Tarin chaired the CCOP meeting.
The matter relating to removing SLIC from the privatisation programme was also discussed. The privatisation ministry has recommended delisting the company due to delay in its corporatisation.
The CCOP gave the go-ahead to sell the hotel to a private party, marking the completion of yet another real estate transaction in the name of privatising the loss-making entities.
Last month, the board of Privatisation Commission had recommended giving away the property in the heart of Lahore at just Rs2 million above the downward revised minimum price of Rs1.94 billion.
The reference price of Rs1.949 billion for the privatisation of Services International Hotel was approved by the cabinet two months ago. Only two parties, namely MCB and Faisal Town Pvt Ltd, participated in the bidding process, it added.
The Rs1.96 billion bid for Services International Hotel had been given by Faisal Town Pvt Ltd. MCB did not match the bid amount. Faisal Town Pvt Ltd submitted the bid amounting to Rs1.951 billion, just Rs2 million above the reference price.
The price at which the government approved to sell Services International Hotel – a property of over 15 kanals and three marlas located at Mall Road Lahore – was Rs300 million lower than the originally approved price of Rs2.25 billion by the PC board in March this year.
However, subsequently, the PC revised downward the minimum price to Rs1.949 billion in June this year.
The government’s privatisation programme largely remains restricted to selling real estate assets. Earlier, the government had sold 23 properties at a total cost of Rs1.11 billion. However, only 10 buyers submitted the bid money of Rs920.8 million in respect of 10 auctioned properties.
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The Pakistan Tehreek-e-Insaf (PTI) government has been unable to privatise any of the loss-making enterprises and is largely focusing on giving away real estate jewels.
The CCOP also took up another summary to delist SLIC from the privatisation list. The meeting was informed that bottlenecks to the privatisation would be removed by December this year and the entity should remain on the privatisation list.
The CCOP and federal cabinet have earlier approved the divestment of up to 20% of government’s shares in the corporation, but the matter has remained pending for the last five years. The transaction has been seen as a source to raise non-tax revenues, as the entity is highly profitable and enjoys preferred status in the insurance sector.
But the divestment has been lingering on for the last five years due to delay in introducing a legislation that will convert the entity from a corporation into a company before its listing at the Pakistan Stock Exchange.
The privatisation ministry was of the view that despite frequent requests made by the ministry to the commerce ministry to expedite the process of introducing legislation to privatise SLIC, no progress had been made.
The ordinance for the conversion of the corporation into a public limited company, introduced and passed in 2016, has already lapsed.
The cabinet committee also reviewed the status of privatisation of other entities, all of them falling behind targets, including the multibillion-dollar privatisation of two LNG-fired power plants.
The finance minister instructed to expedite the privatisation programme – directives that his two predecessors Asad Umar and Abdul Hafeez Shaikh had also given to the ministries.
Published in The Express Tribune, September 11th, 2021.
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