The report of the Public
Accounts Committee has confirmed the reports published recently in the
national press criticizing the poor performance of the Corporate &
Industrial Restructuring Corporation (CIRC) and organization set up by
President Musharraf's government exclusively to arrange sale and
liquidation of irretrievable sick units.
The CIRC was established in March
2000 with all the powers and was assigned the tasks of disposal of 868
sick units found irretrievable and arrange their sale or liquidation by
March 2003. The CIRC is far behind the schedule and has not yet
completed even on 1/5th of its target.
The Public Accounts Committee
after reviewing the audit report for the financial year 2000 to 2002 has
concluded that the federal government suffered a total loss of Rs.10
billion due to an unnecessary delay in the liquidation process of sick
units and merger of organizations.
According to the report signed by
the committee's Chairman HU Beg and all other members except Lt.Gen (Retd)
Talat Masood, the government's decisions regarding the merger and
liquidation of sick units/orgranisation were delayed unnecessarily
causing huge losses to the national exchequer.
The then Chief Executive Gen.
Pervez Musharraf in March 2001, had approved the sale of 868 sick units
through open public auctions these units were identified by the
Corporate Industrial Restructuring Corporation (CIRC) in consultation
with the concerned banks as these units closed for years, owed over
Rs.107 billion to the nationalized commercial banks.
After a detailed presentation to
the Chief Executive, also attended by Ministers for Finances,
Industries, Privatization, apart from Governor State Bank and Secretary
General Finance, the Chief Executive of CIRC, Mr. Tariq Hamid told
newsmen that a priority list of 102 units had been prepared for the
auction of which will start from next month. These units owe over Rs.12
billion to United Bank, Habib Bank, National Bank and NDFC. "We are
beginning with the worst units", Mr. Tariq Hamid claimed.
He said the CIRC will take over
these assets from the government owned banks and financial institutions
at their book value and in return the government will issue bonds to
these banks at the time of privatization of the unit or after three
years of take-over, whichever is earlier. The bonds at the book value of
units will have 5-year maturity period with government guarantee at a
profit fixed by the federal government form time to time in accordance
with State Bank rates, he added.
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 creditors 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 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 is the right step to
exclusively attend to the task.
slow pace of work assigned to CIRC it appears that not many
buyers/investors both domestic and foreign are not coming forward as was
initially expected. It was hoped that some overseas Pakistanis may enter
the scene to buy suitable enterprises from among the sick units.
Additionally, foreign investors from the Middle East countries may also
be interested in exploring the opportunities to make investments in
relatively medium scale amounts. These expectations, however, did not