The Cabinet Committee on Privatisation (CCOP) on Thursday reversed a seven-month-old legally questionable decision of deciding the fate of real estate jewel, Roosevelt Hotel New York, through a ministerial task force, putting the transaction back on right track.
Headed by Adviser to Prime Minister on Finance Abdul Hafeez Shaikh, the CCOP authorised the Ministry of Privatisation to hire a financial adviser for finalising the transaction structure of Roosevelt Hotel, according to a statement issued by the Ministry of Finance after a meeting.
Roosevelt Hotel, located in the heart of global commercial and tourism hub, is owned by the troubled Pakistan International Airlines (PIA).
Every successive government, including that of Pervez Musharraf, has tried to sell or give the hotel on lease. The last serious attempt was made during Pakistan Muslim League-Nawaz’s (PML-N) government tenure when the Privatisation Commission (PC) got the hotel valuation done by a third party.
After wasting over seven months, the CCOP has finally adopted a path, which is legal and should be the way to decide the future of any government-owned entity.
The CCOP reviewed a one-point agenda for the privatisation of Roosevelt Hotel.
“As requested by the Aviation Division, the CCOP decided to de-notify the Roosevelt task force formed earlier under the chairmanship of minister for privatisation for framing terms of reference (TOR) for leasing Roosevelt’s site for setting up a joint venture project,” stated the finance ministry.
In November last year, the CCOP had constituted the task force for finalising TOR for leasing out Roosevelt Hotel. The task force comprised Privatisation Minister Mohammad Mian Soomro and Special Assistant to Prime Minister on Overseas Pakistanis Zulfiqar Bokhari along with bureaucrats from the line ministries.
The federal cabinet had on December 3 ratified the CCOP’s decision of forming the task force and on December 27, 2019 the PC board approved TOR of the task force.
The quorum of the task force would be considered incomplete without the presence of minister for privatisation, special assistant to the PM on overseas Pakistanis and chief executive officer of PIA, according to the board’s decision.
The decision to set up the task force and bring in Bokhari had raised many eyebrows as there was no provision for a task force in the Privatisation Ordinance 2000 and such functions are performed by transaction committees and financial advisers in a professional manner.
“The Aviation Division had pointed out during the meeting of CCOP that they had not been consulted in the matter,” said a summary of the Aviation Division that became the base for reversing the earlier CCOP decision.
“On a summary of the Ministry of Privatisation, the CCOP on November 15, 2019 constituted the task force for framing TOR for leasing Roosevelt’s site for setting up a joint venture project,” said the Aviation Division summary.
But the Ministry of Privatisation was of the view that it did not recommend to form the task force in its November 15 summary and the decision was taken by the CCOP on its own. Participants of the November 15 meeting told The Express Tribune that Zulfiqar Bokhari’s input about Roosevelt Hotel became the reason for his inclusion in the task force.
The PC notified the task force and also arranged its meetings but the aviation ministry did not attend these meetings, objecting to the constitution of the task force.
The aviation ministry also objected that it did not have the minutes of the task force meetings held on the subject in the Ministry of Privatisation.
In its summary, the Aviation Division raised “some fundamental questions on the scope assigned to the financial adviser, role of Privatisation Commission under the relevant law, legal basis for constitution of the taskforce and the proposed TORs of the taskforce, which are basically the functions of the Privatisation Commission”.
The issue of early disposal of Roosevelt Hotel has been discussed with the prime minister at least two times in past one month. First, it came under discussion on June 8 and then on June 19.
The CCOP on Thursday directed the Privatisation Commission to hire a financial adviser to start the process for the transaction in the light of the report of Deloitte from July 2019 which recommended “that the highest and best use of the Roosevelt Hotel Property is to redevelop the site into a mixed use (through Joint Venture) of primarily office tower over retail and condominium,” according to the finance ministry.
It was also directed that Deloitte would update its study on the hotel transaction in the next four weeks and the same shall be shared with the CCOP, it added.
However, Adviser to Prime Minister on Institutional Reforms Dr Ishrat Husain was of the view that there was no need for second opinion of the Deloitte as the consultancy firm has already given its best option.
The privatisation ministry secretary said that it would take one to one and half years for completing the transaction. He said that the investment climate and recovery from Covid-19 would determine the timing of the transaction. ( By Shahbaz Rana for The Express Tribune