Loot sale of sugar mills continues unhindered

By Ansar Abbasi

ISLAMABAD: After an unsigned note led to the unhindered “loot sale” of Dadu Sugar Mills for just Rs90 million as against the previous offer of Rs400 million, efforts are now under way to dispose of Thatta Sugar Mills for peanuts.

Like Dadu Sugar Mills, the previous bidders in case of Thatta Sugar Mills had offered Rs235 million in November 2008 but now another singular bid of Rs80 million received by the Official Assignee is being considered for approval.

Secretary Industries Sindh Ali Ahmad Lund when contacted though said that Dadu Sugar Mills was sold last year before his appointment as secretary industries. In the case of Thatta Sugar Mills he argued that he had moved the summary for the chief minister giving all the facts. “Now it is up to the chief minister to approve its sale for Rs80 million or reject it,” he said, adding that the Sindh High Court had liquidated Dadu Sugar Mills and is also involved in the liquidation process of Thatta Sugar Mills. He, however, said that it is the government, which recommends the liquidation to the High Court.

The sad fate of Sindh Sugar Corporation’s two sugar mills in Dadu and Thatta bear testimony to the claim that the like the state-owned land, the state owned assets too are being sold at throw away prices.

The PPP’s visionary chairman, Shaheeed Zulfiqar Ali Bhutto, founded the Sindh Sugar Corporation to open up the rural Sindh to industrialisation bringing employment to its poor inhabitants. In 1976, Sindh Sugar Corporation was provided a capital of Rs625 million to install two sugar mills in Dadu and Thatta. The Sindh province contributed Rs367 million while the French credit amounted to Rs259 million. The total cost on these plants was Rs329m on Thatta Sugar Mills and Rs297m on Dadu Sugar Mills. The government of Sindh also provided 276 acres and 146 acres for these mills respectively.

These plants, like many others set up with foreign loans, also ran into tremendous losses and by the year 1999, the losses rose to billions. The assessment made in 1999 had put the assets of Dadu Sugar Mills at Rs627 million and those of Thatta Sugar Mills at Rs716 million. The liabilities of these mills had reached more than Rs3.0 billion of which around Rs2.0 billion, which were provided by the Sindh government, were written off.

Sources said that other creditors also renegotiated and the overall liability was reduced to Rs620 million, while the assets were estimated at Rs1.343 billion. The Sindh government decided to dispose of these mills to recover whatever it could from its sunken investment.

In 2002, the Sindh Privatisation Commission began efforts to dispose of these two mills. The reserve prices of Rs465 million and Rs408 million were fixed for Dadu Sugar Mills and Thatta Sugar Mills respectively. The Privatisation Commission could not get more than Rs156 million and Rs50 million respectively in bids for these mills.

In 2005, the Sindh cabinet expressing its dissatisfaction over the progress made by the Privatisation Commission, decided that, in view of the experience of the Official Assignee of the Sindh High Court in disposing of sick/defaulting industrial units, these units should also be got auctioned by that office through liquidation process.

The Official Assignee initiated the process in 2007, and fixed Rs350 million as reserve price for Dadu Sugar Mills and Rs230 million for Thatta Sugar Mills. The highest bid of Rs250 million was received for Dadu Sugar Mills and Rs100 million for Thatta Sugar Mills. The provincial government declined these offers.

The process was repeated by the Official Assignee and this time the bid for Dadu Sugar Mills went as high as Rs400 million which was hotly contested by three other bidders with offers of Rs390m, Rs385m and Rs370 million. The bid for Thatta Sugar Mills also went up to Rs175 million followed by three other bidders at Rs147m, Rs140m and Rs130m.

The parties, which participated in these bids, were M/s Shahjehan Cotton Factory (the highest bidder for Dadu Sugar Mills), M/s Adil Enterprises, M/s Kohsar Enterprises, M/s Unique Trading Co. and M/s Sooraj Enterprises (the highest bidder for Thatta Sugar Mills). The matter was under consideration of the provincial government when it was time for new elections.

Come the PPP government in Sindh and a strange note from a top government functionary changed the entire scenario. The sources said that the note initiated by some anonymous writer had such a mysterious affect that Dadu Sugar Mills ended up in the hands of M/s Naudero Sugar Mills (which had never participated in earlier bids) for a paltry sum of Rs90 million.

The note, which was neither named nor signed by its writer, and which worked as a command or directive from the top government functionary, desired that the Sindh cabinet should urgently address the issue of privatisation of Dadu Sugar Mills (Assets Only) on fast rack basis. It also mentioned terms for its disposal.

The top government functionary marked this anonymous note to Secretary Industries on April 27, 2008 directing him to put up relevant papers immediately. Official Assignee invited fresh bid on May 11, 2008 and by July 4, 2008, Dadu Sugar Mills was handed over to the new bidder.

So, what took the previous Sindh governments and the cabinets almost 10 years to ponder over the prices, which went up from Rs156 million in 2002 to Rs400 million in 2007 for Dadu Sugar Mills, with five active parties pursuing the bidding process, was disposed of in just two and a half months for a paltry sum of Rs90 million.

This time, surprisingly, all the previous bidders who followed the process for so many years were made to vanish, their previous bids ignored and a new player’s singular bid of less than 25% of the last highest bid was accepted without any reservation. Unlike the previous governments, the Official Assignee was not requested to hold another bidding or to negotiate with the previous bidders. The complacent provincial government was happy with the bid of Rs90 million for an asset valued at Rs627 million and for which a bid of Rs400 million had been received only a year ago. The retired official of the Industries Department, who handled this case for his political masters, Mr. Murli Manohar, has been rewarded and reemployed as consultant.

The most worrisome news is that after the unhindered loot sale of Dadu Sugar Mills, efforts are now under way to dispose of Thatta Sugar Mills. Again, the previous bidders have been made to escape, who had bid up to Rs235 million (M/s Sooraj Enterprises during this government in November 2008) and another singular bid of Rs80 million received by the Official Assignee (M/s Kohsar Enterprises in October 2009) is being considered for approval.

“Let us hope some body stops them this time,” an official source involved in the process but feeling extremely perturbed said, wondering, “Will the Sindh cabinet or Sindh Assembly wake up, stop loot sale of Thatta Sugar Mills and retrieve Dadu Sugar Mills?” Judging from their past track record, he said, perhaps they won’t. “It would again be the judiciary which will have to come to our rescue,” the official source said.