Within hours of the announcement that a deal had been finalized with the winning bidders there was chaos in concerned circles. Jaws were left dropped. At first i didnt quite realize how big the deal was, as it seemed it was more fuss and less significance. But gradually with more analysis from specialists and sources it was clear that something had gone wrong.
And this article today sums the entire episode in detail.
Apparently this was the new federal minister for privatisation Awais Leghari’s first assignment (or experiment) in his additional capacity.
There are two aspects discussed in this piece of news.
Price paid
Monopoly resulting from the sale.
For #1, here is the comparative analysis as per the figures quoted in the news:
Steel Mill sold = $362 million at share price of $0.28
Employees offer = $400 million at share price of $0.31
Stock-broker offer= $500 million at share price of $0.39
Just compare the figures. Employees are offering 10% more money, while the stock broker is offering 25% more money compared to employees.
Either of the figure hardly proves that the Steel Mill was “thrown away”.
As the newsman started off with a “conspiracy theory”, he became lazy and didn’t do a thorough job in reporting the “viability” of rejected bids.
Any Tom, Dick, and Harry can announce a price for the mill. We have to see if the offer is viable. Stock broker’s offer seems to be more of a slogan as there is no “consortium” mentioned to back his offer.
Employees consortium seems to be more realistic. However the news fail to explain who were the other members of this consortium. Any major banks, or brokerage houses?
For #2 issue of monopoly. Wasn’t Steel mill itself a monopoly to begin with?
Bottom line is that we ought to be careful in pointing fingers and shouting “corruption”. Not at the level of Dawn. Dawn should have done a better job in “backing up” their story.
Our court is saying that the current deal has caused Rs. 16 billion ($267 million) loss to Pakistan. That puts the actual value of steel mill as per the court at Rs. 37.68 billion ($629 million).
Now read what Dawn reported as per #1 above (original post by Haris).
The Employee’s consortium offered $401 million, and a Karachi stock broker offered $501 million.
I am curious as to how the employee’s consortium or stock broker and the winning bid were all wrong. Let’s see!
