The privatisation of Pakistan Engineering Company (PECO) has been surrounded by controversy since the beginning. The affairs have arrived at an impasse due to fears of litigation and the ongoing tensions between the current MD and the Board.
The privatisation of PECO was recently put on hold due to the following reasons (i) a case in Islamabad High Court (IHC); (ii) default on repayment of an NBP loan; (iii) defaulter’ status on Pakistan Stock Exchange; (iv) mutation of land in the name of PECO; (v) non-availability of audited/approved financial statements from June 201 8 onwards; (vi) verification of valuation of assets (including Badami Bagh and Kot Lakhpat Land); (vii) unauthorised JV between MD and a private firm; and (viii) inquiry initiated by SECP for non-compliances on March 26, 2021.
Keeping in view the above problems the Privatisation commission has proposed the following recommendations to the cabinet committee regarding toe privatisation of PECO. (i) PECO may be removed from the Active Privatization List; (ii) PECO’s land may be sold by Privatization Commission in light of Cabinet decisions dated 30-5-1994 and 31-12-2004 and subsequent PECO’s Board decision for implementation on 12-3-2005 to settle GoP liabilities; and (iii) Privatization may be considered when the entity is free from inherent issues and encumbrances.
The main decision that was to delist the company from the privatisation list has been agreed upon but the sale of the land in question has been denied in far of it attracting new litigation.
It has been discussed that the first step towards the resolution of the problems is to remove the MD and reconstitute the board but for fear of litigation advice from Ministry of Law and Justice must be sought first.