The Corporate and Industrial Reconstruction Corporation (CIRC) is far behind in achieving its targets — both in term of sale of irretrievable sick units and revival of vioable closed industrial units. The President who presided over a briefing session by the CIRC authorities in Islamabad last month was not satisfied with the pace of work and asked them to double their efforts to achieve their targets.

The CIRC was set up by the present government in March 2001 and was assigned the task of selling of over 250 sick units described as irretrievable and arrange revival of over 300 closed units which had potential for revival by end 2002. The Chairman CIRC told the meeting that the corporation had disposed of 54 non-performing assets during its first phase ending June 2002 and identified another 134 units for the second phase to be completed by June 2003. Similarly 143 sick units have been revived during this period.

The meeting was told that the CIRC will assume 54 NPAs worth Rs.7.78 billion of IDBP, 22 worth Rs.1.278 billion of NBP and 55 worth Rs.5.34 billion of HBL. The DFIs and banks have reported a total of 542 NPAs to the CIRC worth Rs.80.336 billion. Out of them, 76 NPAs worth Rs.11.746 billion belong to IDBP, 181 worth Rs.30.379 billion to NBP, 253 worth Rs.32.23 billion to HBL and 32 worth Rs.5.980 billion to ADBP.

The CIRC officials said the reported NPAs of ADBP were being examined by the corporation. The Chairman CIRC, Hamid said the assumption of fresh NPAs by the CIRC would leave it with NPAs worth Rs.60 billion for resolution during the next phase of its operations.

The CIRC has already disposed of 54 NPAs for about Rs.11 billion out of 339 bad loans worth Rs.60 billion assumed by it in the first phase of its operations up to June 30, 2002. Another 153 NPAs to the tune of Rs.33 billion have been referred back to the banks and DFOs for resolution. Out of them NPAs involving Rs.12.5 billion have already been resolved by the banks while the remaining ones are at various stages of resolution.

Meanwhile, the Revival Committee on Sick Units has revived 134 units involving an outstanding amount of Rs.37 billion against them. The committee has considered 303 cases with an outstanding amount of Rs.65 billion and involving a default of Rs.38.2 billion. The revived unit, it was claimed created 40,000 jobs.

The strategy to auction the irretrievable sick industrial units, having been approved by the Chief Executive, was seen as a last ditch attempt by the government to solve the twin problem of sick industries and non-performing loans of the NCBs/ DFIs which constantly threatened their operational liability. It appeared that the creditor banks and DFIs have not been able individually to change the management of the sick units owing sizable amounts of loans through open auction in the market. This may be due partly to the fact that the task requires concerted action by the management of the banks and that would destabilize their daily working as the number of defaulting units has been increasing rapidly in each bank. In this contest creation of a single specialized institution like the CIRC was the right step to exclusively attend to the task.

The revival of sick industrial units, which had gone into default for various reasons, represents a sound policy to strengthen economy and to generate employment opportunities in the country. The fact that 143 sick units have started their operations again and are generating funds to return the bank loans is obviously a welcome development. A large number of such units had gone sick due to genuine difficulties. There is need to help such units to stand on their own feet and to start contributing towards national economy again. It is, however, hoped that the government will not again fall prey to the manipulative tactics of the rogue industrialists, who have tendency of minting money through fair or foul means. A sizeable number of sick units are those, which are established with the sole motive to swallow the bank loans. The Committee assigned the job of reviving the sick units should, therefore, be mindful of such elements. It is encouraging that the revived units have paid back their loans worth about four billion rupees and have also generated 40,000 jobs. It is necessary to encourage and assist the private sector to come forward and play its due role in the revival and sustenance of the national economy. It is an established fact that private sector alone can generate employment opportunities to curb unemployment in the country. The official silence about the amount of written-off loans in the restructuring process is, however, intriguing. It's national wealth and no one should be allowed to swallow it on any pretext whatsoever. The defaulters must be brought to book across the board and the defaulted loans must be recovered from them through all possible means. The national wealth should not be allowed to be squandered by the vested interests through clandestine tactics. No one is against the revival of sick units, but it should not obviously be done at the cost of national exchequer.