Pakistan drops two state-owned firms from privatization list

By Staff Reporter

ISLAMABAD: Pakistan has removed two state-owned engineering companies from its active list of privatizations, citing unresolved legal and financial issues.

The Cabinet Committee on Privatization decided to defer the sale of Pakistan Engineering Company Ltd. and Sindh Engineering Ltd. until their problems are resolved by the Ministry of Industries and Production.

Pakistan Engineering, which manufactures electric meters and transformers, has been facing a number of challenges, including government receivables of over Rs7.2 billion as of June 30, an ongoing investigation by the National Accountability Bureau on its previous share disposal, a joint venture agreement that was beyond the power of its managing director, a petition filed by creditors in the Lahore High Court, pending land mutations, default status on loans and stock exchange, and non-availability of audited accounts since June 2018.

The Privatization Commission Board recommended that Pakistan Engineering’s land may be sold to settle government liabilities and that its privatization may be considered when the entity is free from inherent issues and encumbrances.

Sindh Engineering, which is not operational since 2008, has accumulated losses of Rs812 million and a negative equity of Rs575 million as of June 2017, the latest available financial statements.

It also owns two valuable properties that have serious legal and ownership issues.

One is a commercial plaza in Lahore that was purchased in auction by its predecessor company in 1959 but the mutation is still pending. The other is a 448-acre agricultural land in Kasur that was purchased in 1966 but the mutation was canceled in 1975 and later restored in 2011 and 2014.

However, part of the land had already been sold by the ex-owners to multiple parties and the cases are pending in courts.

The Cabinet Committee directed the Ministry of Industries and Production to resolve all issues of Sindh Engineering prior to initiation of its privatization process.

Pakistan has been pursuing an ambitious privatization program to raise revenue and reduce losses from inefficient state-owned enterprises, however it has budgeted only about Rs15 billion in receipts from a stalled privatisation process in the current fiscal year.