The Board of Privatization Commission approved the
highest bid of Fatima Group for acquiring 98.4% shares (74,306,100
shares) of Pak Arab Fertilizers, amounting to Rs14.125 billion. Now
Cabinet Committee on Privatization has to give its final approval.
This is a major transaction, which is expected to enable the private
sector to develop the fertilizer industry of the country. It is also
expected to provide a boost to the on going process and keep the
interest of investors in the other upcoming transactions. In the final
biding four strategic investors participated. These were: 1)
consortium of Reliance Export under the umbrella of Fatima Group and
Arif Habib Group, 2)
Dawood Hercules Chemical, 3)
consortium of Nishat Chunian and Umar Fabrics and 4)
Al-Ghurair Investment of UAE.
Earlier, the authorized representatives of all the
four eligible bidders, who had deposited Rs150 million each as earnest
money during the stipulated period dropped their sealed bids in the
transparent bid box. The box was opened and bids were read over.
Consortium of Reliance Export under the umbrella of Fatima Group and
Arif Habib Group gave highest offer of Rs14.125 billion or Rs190 per
share. Dawood Hercules Chemical emerged second with offer of Rs12.409
billion or Rs167 per share. Al-Ghurair Investment of UAE secured third
position with an offer of Rs10.774 billion or Rs145 per share.
Consortium of Nishat Chunian and Umar Fabrics was the lowest with
Rs9.511 billion or Rs128 per share offer. The three highest bidders
were invited during the second open bidding round to improve their
bids but none of them responded and the lower ones withdrew in favour
of the highest bidder.
The GoP owns 52% shares of Pak Arab Fertilizers
(through National Fertilizers Corporation). International Petroleum
Investment Company of UAE owns the balance 48% shares. The paid-up
capital of the company is Rs743.061 million (split in around 74.306
million shares having a face value of Rs10 per share). The company
owns and operates a large fertilizer complex in Pakistan engaged in
the manufacture of Calcium Ammonium Nitrate (CAN), Nitro Phosphate
(NP) commonly known as compound fertilizer, besides Ammonia, Nitric
Acid and Urea. The company was incorporated in 1973 as a result of
signing of a protocol between the Government of Pakistan and State of
Abu Dhabi. The raw materials used for manufacture of the various types
of fertilizers are: natural gas supplied by Sui Northern Gas Pipelines
and rock phosphate imported form Jordan/Moroco. The project is located
at Khenawal Road in Multan in the province of Punjab. The site area
comprises of about 302 acres, which include area for the factory and
the housing colony. The company owns this land area.
The annual capacities of the products are Ammonia
316,800 metric tonnes, Nitric Acid 455,400 metric tonnes, Nitro
Phosphate 304,500 metric tonnes, Calcium Ammonium Nitrate 450,000
metric tonnes and Urea 92,400 metric tonnes. Currently, the company's
products are being marketed through National Fertilizer Marketing —
a government-owned company responsible for marketing the fertilizer
production of all the government owned fertilizer-manufacturing units.
The plant is operating at excellent efficiency level, which is at an
average, above the installed capacity. All the plants are in sound
condition and have been supplied by renowned suppliers.
(Annual Production In Tonnes)
Calcium Ammonium Nitrate
It is worth noting that Fatima Group consortium is
not only busy in establishing a fertilizer unit but also submitted the
highest bid for a major integrated fertilizer manufacturing unit. The
other point worth noting is that two textile giants were keen to get
control of this unit. Dawood Hercules also showed interest but it eyes
are set at Engro Chemical, where it is constantly increasing its
stake. However, the lack of interest by Fauji and Engro prompt many
analysts to say that the key players seem least interested in making
further payment in the fertilizer sector. They attribute this lack of
interest to the existing Fertilizer Policy announced in 2001.
Surprisingly, the government is not paying any
attention to the criticism on the policy, particularly the pricing of
feedstock. It becomes all the more pinching because despite reserving
Mari gasfield for fertilizer sector, the government is bent upon
diverting gas from this field to power plants. Fertilizer import bill
is expected to swell with the passage of time because of growing gap
between demand and supply.