AGP Recommends Stronger Technical Focus in Privatisation Bids

The Auditor General of Pakistan (AGP) has formally recommended amendments to the Privatisation Commission’s bidder selection framework for the divestment of state-owned enterprises, with specific emphasis on strengthening pre-qualification criteria.

These observations were presented during a recent Public Accounts Committee (PAC) sub-committee session convened to review audit reports of the Ministry of Privatisation pertaining to fiscal years 2010-11 and 2013-14. Audit representatives contended that greater weighting should be assigned to bidders’ technical and operational competence rather than prioritising the highest immediate financial bid.

This position received support from a Public Procurement Regulatory Authority (PPRA) official, who endorsed the view that technical evaluation merits increased significance over pure financial considerations in the qualification process.

The sub-committee further directed the Privatisation Commission to undertake a thorough review and update of the Privatisation (Modes and Procedure) Rules, 2001, highlighting the need for enhanced clarity to facilitate consistent and transparent implementation. Audit findings identified procedural deficiencies in several historical transactions, including those involving Kot Addu Power Company (KAPCO), Javedan Cement, Mustehkum Cement, Faletti’s Hotel, and Pak American Fertilizer Limited.

In the Javedan Cement privatisation, auditors noted the absence of a comprehensive pre-qualification mechanism encompassing financial, operational, and technical dimensions, with qualification resting solely on the submission of earnest money. A parallel concern was raised regarding Mustehkum Cement, where bidders were required only to deposit earnest money within a stipulated period, resulting in a restricted pool of qualified participants.

Representatives from the Privatisation Division maintained that all prior transactions adhered to the prevailing regulatory framework and received requisite approvals from competent forums, asserting that such divestments delivered market-driven proceeds to the national exchequer.

Separately, the audit flagged unresolved matters in the KAPCO privatisation process, particularly concerning the escrow mechanism and the reconciliation of stores, spares, and fuel inventories, with persisting deficiencies in available documentation.