Islamabad: The Cabinet Committee on Privatization (CCOP) which met here today with the Federal Minister for Finance and Economic Affairs Dr. Abdul Hafeez Shaikh in the chair has approved the privatization of “Transaction Structure of National Power Construction Corporation” and “Transaction Structure of Heavy Electrical Complex”. There have been three items on agenda for today’s meeting of which two of them were approved and third one Benazir Employees Stock Option Scheme (BESOS) was discussed in detail. After due deliberation on this scheme, the CCOP approved two out of five recommendations made by Privatization Commission whereby Finance Division is to release Rs.10 million on annual basis for BESOS and Rs.1.00 billion demanded on actual basis to pay the buyback claims in hand.
The CCOP allowed Privatization Commission for the sale of minimum 88 % GoP shares in NPCC and divestment of minimum 96 % GoP shares in HEC together with management control. The CCOP also agreed to the PC proposal and directed PPL Employees Empowerment Trust (PPLEET) to surrender bonus shares received by the entity-based trust to the PC.
The PC explained before the CCOP that under Benazir Employees Stock Option Scheme (BESOS), 50 % cash dividend is distributed among employees who receive free of cost unit certificates while shares are retained by the respective Trusts. Remaining 50 % dividend is transferred to the Central Revolving Fund for subsequent payment of buy-back claims. The Scheme, as such, envisages 50 % cash dividend distribution to employees and not distribution of 50 % shares (including bonus shares) to them.
BESOS is designed as a special instrument, which operates under a dedicated framework approved by the Federal Cabinet for ensuring transfer of 12 % GoP shares to entity based Trust free of cost for a specific period while employees are given unit certificates in lieu of the shares retained in the respective Trusts. These shares are subsequently transferred back to GoP for buyback of claims of the beneficiary employees.
The CCOP constituted a sub-committee headed by the Federal Minister for Privatization to further look into the details of the remaining three to four recommendations made by Privatization Commission.
The two projects that were approved for Privatization commission have been the Heavy Electric Complex (HEC) and National Power Construction Corporation (NPCC). Heavy Electrical Complex (HEC) is one of the industrial units of State Engineering Corporation (SEC) engaged in the manufacturing of power transformers of different types with primary voltage rating of 66 and 132 KV. In addition, the HEC undertakes repair and refurbishment of old and damaged power transforms up to 500 KV. It was incorporated as a private limited company in 1991 and commenced full-scale commercial operation in 1997. HEC is included in the privatization programme since 2005.
It is located in Hattar Industrial Estate about 65 km from country’s capital Islamabad and is spread over an area of 72.489 acres with six main manufacturing shops namely Machine shop, Winding shop, insulation shop, Core shop, Fabrication shop and Assembly shop. In addition HEC has an oil purification shop, high voltage test laboratory equipped with 250 tonnes overhead travelling crane. It can diversify its manufacturing range by including other products such as instrument transformers, high voltage circuit breeders and other grid stations equipped for meeting demand of the products in domestic and foreign markets.
The National Power Construction Corporation (NPCC) was established in 1974 by the Government of Pakistan under the Federal Ministry of Water and power, NPCC is registered under the Companies Ordinance 1984 and has its Branch Office in Saudi Arabia in the name of NPCC (Pakistan) Limited, registered under Foreign Capital Investment Regulations. NPCC undertakes execution of large power construction projects including high and low voltage lines, distribution networks and electrification of large housing/commercial projects on turnkey basis in Saudi Arabia.
Minister for Privatization, Chairman Board of Investment, Secretary Cabinet Division, Dy. Chairman Planning Commission, Finance Secretary and other high officials were present in the meeting.
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