ISLAMABAD: The government decided to go ahead with the privatisation of multibillion rupees Services International Hotel, Lahore, a subsidiary of National Insurance Company Limited, in a bid to execute a decade-long pending transaction, sources said on Thursday.
“The Privatization Commission decided to advertise for seeking expression of interest (EOI) from the interested parties in order to kick-start the process of selling out this asset,” a source said.
Sources, however, said efforts were made to create stumbling block in the deal for the third time by raising solvency issues. The government decided in principle to accomplish the transaction within next few months.
The Services International Hotel is located on a prime location of Mall Road, near Lahore Gymkhana. It is a four story building, with a covered area of 15.4 kanals consisting of 100 rooms. The building was constructed almost 40 years ago on load bearing walls structure.
In the past efforts were made to privatise the public asset, but they could not be succeeded. Back in 2006, the hotel received an offer price close to one billion rupees. The value would have gone into billions of rupees, according to the experts.
The Cabinet Committee on Privatization has ruled out objections raised by the National Insurance Company Limited (NICL) on the proposed sale of the hotel twice after which the federal cabinet also granted its assent to move ahead with completion of the transaction.
An objection was raised that the sale might create solvency issues and therefore the issue should be resolved prior to move ahead with the transaction.
Sources said the Cabinet Committee on Privatization was expected to meet next week under the chairmanship of Minister for Finance Asad Umar and the latest official communication, raising the objection, would be put before the forum.
“But, advertisement might be published meanwhile to get feedback from the interested buyers,” an official said.
The official said it might not be possible to accomplish the transaction within the current fiscal year but progress would be definitely made for moving towards the desired goal.
The official further said divestment of government stake in Mari Petroleum might be accomplished within the current financial year. The government has already received bidding from the renowned parties for hiring financial advisors to privatise two regasified liquefied natural gas- (RLNG) based power plants. The two RLNG plants – Balloki Power plant and Haveli Bahadur Shah – have a combined production capacity of more than 2,400 megawatts.
Some international financial institutions were interested to see one of their subsidiaries as financial advisor but claimed that the government decided to hire financial advisor through open and competitive bidding.
“The RLNG plants transaction is expected to be done in next financial year 2019-20,” the official said. It is an appropriate time to accomplish the task, otherwise there would be a risk of losses if assets are kept into clutches of public sector which are known for their inefficiencies and corrupt practices.
(This news/article originally appeared in The News on February 8th, 2019)