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Government of Pakistan |
S.R.O. (I)/2007. - In exercise of powers conferred
by section 41 of the Privatisation Commission Ordinance, 2000 (LII of 2000),
the Privatisation Commission hereby makes the following regulations, namely:-
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THE PRIVATISATION
COMMISSION |
1. Short title and commencement:-
(1) These regulations may be called the Privatisation
Commission (Hiring of Financial Advisors) Regulations, 2007.
(2) They shall come into force at once.
2. Definitions:-
(1) In these regulations unless there is anything repugnant
in the subject or context, -
(a) "Evaluation Committee" means a committee constituted by the Chairman,
comprising not less than three persons which may include a member of the Board
of the Commission with the purpose of evaluating the technical and financial
proposals submitted by the interested parties;
(b) "Financial Advisor" or "FA" means an external advisor hired by the
Privatisation Commission with the approval of the Board to advise on a major
privatisation;
(c) "interested party" or "IP" means a person who has submitted an expression
of interest through a formal proposal and payment of required fee, if any;
(d) "major privatisation" means a privatization
(i) which envisages transfer of management control; and
(ii) where the size and complexity of such a privatisation warrants the
appointment of a financial advisor; or
(iii) a privatisation which the Board on the recommendation of the Commission
has resolved to be a major privatisation notwithstanding the fact that
conditions (i) and (ii) aforesaid are not satisfied;
(e) "Ordinance" means the Privatisation Commission Ordinance, 2000 (LII of
2000);
(f) "pre-qualified IP" shall have the meanings as assigned to it in regulation
9;
(g) "Request for Proposals Package" or "RFP Package", in respect to major
privatisation means, the letter of invitation, the terms of reference, draft
agreement with FA, evaluation criteria for technical, financial proposals or
both, profile of the entity or interest being privatised and such other
document which the transaction manager deems as necessary;
(h) "top-ranked IP" shall have the same meaning as assigned to it in
regulation 11;
(i) "total fee" means total fee as defined in regulation 4 ; and
(j) "transaction manager" means the person appointed by the Secretary to be
primarily responsible for liaising with the FA and ensuring to the extent
possible, that the FA is complying with the terms of reference and submitting
the deliverables in accordance with agreed schedules.
(2) All other terms and expressions used but not herein
defined shall have the same meanings as are assigned to them in the Ordinance.
PROCEDURES
3. Decision to appoint a Financial Advisor. - The Board shall decide whether
or not a privatisation (i) may be treated as a major privatisation; and (ii)
warrants the appointment of a Financial Advisor. Such decisions shall be taken
by the Board based on a summary prepared by the Commission.
4. Initiation process. - The transaction manager prior to the placement of
advertisement in the print media for an FA shall prepare and submit for
approval of the Chairman the RFP Package. Where deemed necessary by the
Commission, inputs on the terms of reference that form part of the RFP Package
shall be sought from (i) the Ministry under whose jurisdiction the entity
being privatised falls, (ii) the senior management of the entity being
privatized;’ and (iii) the relevant regulatory authority. The RFP Package
shall require the parties to submit, inter-alia, information on how it will
structure the transaction and why it is qualified to undertake the
transaction. In addition to the technical proposals, the Parties shall submit
in a separately sealed envelope a financial proposal describing the amount and
structure of its fees in accordance with the requirements of the RFP Package.
The financial proposals shall specify the Parties fees (the "Total Fee") as
the sum of two parts: a retainer and out of pocket expenses and success fee
(usually a percentage of the actual sale proceeds).
5. Advertising for the Financial Advisor. – Subject to regulations 13 and 14
hereinbelow, the FA position shall normally be advertised in the relevant
media and parties will be invited to submit expressions of interest and their
proposals. The parties shall be required to provide technical and financial
proposals normally within thirty days from the date of publication of the
advertisement.
6. Evaluating the proposals. - On expiry of the date for submission of
proposals, the evaluation process will begin. The transaction manager shall
circulate the technical proposals to the Evaluation Committee, while the
sealed financial proposals will remain in the custody of the Secretary as per
procedures laid down separately.
7. Evaluating the technical proposals:-
(1) Each technical proposal shall be standardized using the
four categories listed below. The weight to be assigned to each category shall
be decided by the Commission within the ranges specified below. The sum of the
assigned weights must total 100:-
Category Weight
(a) Specific firm/consortium experiencerelated to the assignment 25-40%
(b) Competence of team 25-40%
(c) Work plan and methodology 25-40%
(d) Effectiveness of presentation 0-10%
(2) Each member of the evaluation committee will assign
preliminary scores for each technical proposal using standardized sheets
prepared by the transaction manager.
8. Finalising the technical scores. - A meeting of the evaluation committee to
finalise the technical scores will normally be called. The final individual
technical scores of the Evaluation Committee members will be tabulated by the
transaction manager on a top sheet which will be signed by all the members of
the evaluation committee. The final technical scores of each IP will be the
average of the individual technical scores allocated by each member of the
Evaluation Committee. The top sheet, including the final technical scores,
will be submitted to the Chairman for approval.
9. Opening of financial proposals. – Short-listed IPs that receives a raw
technical score (Str) of 70 points or higher (pre-qualified IPs) will be
invited to attend the opening of the sealed financial bids. All other IPs will
stand disqualified and their sealed financial proposals will be returned to
them unopened. The sealed financial proposals shall be opened by the Secretary
or his nominee. Immediately before the opening of the financial proposals, the
Commission will announce a notional value of the expected sale proceeds. This
figure shall have been approved by the Chairman and will be used solely for
calculating the success fee component where the fee is quoted as a percentage
of the sale proceeds.
10. Scoring of technical and financial proposals. - The technical proposal
shall be assigned a raw score (Str) which shall be scaled up to constitute a
final technical score (St) in the following manner, namely:-
St = Str x 100/Stmax
where Stmax = Raw score of the highest ranked IP on technical criteria.
The financial score (Sf) will be calculated in the following manner, namely:-
Sf = 100 x (Fmin/Ff)
where Fmin = Lowest Total Fee bid
and Ff = Total Fee bid by the IP under consideration.
The combined technical and financial proposal (Sc) shall be calculated in the
following manner, namely:-
Sc = 0.80 x St + 0.20 x Sf
11. Ranking the pre-qualified Interested Parties. - The transaction manager
shall submit to the Evaluation Committee the cumulative marks (technical plus
financial) of the pre-qualified IPs based on the calculations set out in
regulation 10. The submission will identify the pre-qualified IP scoring the
highest cumulative scores (the "top-ranked IP"). Upon endorsement by the
evaluation committee, the transaction manager will submit the rankings of the
pre-qualified IPs to the Secretary for approval, after which a summary
recommending the hiring of the top-ranked IP will be moved to the Board. If
the Board approves the summary, the top-ranked IP will be invited for contract
negotiations.
12. Contract negotiations. – The contract negotiations shall be conducted by
the negotiation team comprising the Director-General or Additional Secretary,
transaction manager, legal consultant and any other person that the Board may
authorize, with the authorised representatives of the top-ranked IP. The
negotiations team of the Commission shall keep the Secretary of the Commission
informed about
the progress of the negotiations. The negotiations will focus on, inter-alia,
issues related to milestones and phases, deliverables, contract duration and
procedures for disbursements. The Total Fee (or a component thereof) will be
negotiated if the Board so authorises. In case the negotiations with the
top-ranked IP are unsuccessful, negotiations with the authorised
representatives of second-highest ranked IP will be carried out. If these also
prove unsuccessful, negotiations with the authorised representatives of
third-highest ranked IP will be carried out. If these also prove unsuccessful,
the matter will be referred back to the Board for further directions. The
Board may, in its discretion impose a time period for contract negotiations.
13. Applicability of regulations.-
(1) These regulations shall apply to all major privatisations
where a FA is to be appointed, provided that, the applicability of these
regulations may be waived in part where circumstances warrant a waiver and the
Board so authorizes.
(2) Notwithstanding anything provided hereinbefore and in
addition to the foregoing, as regards all international capital offerings and
any other Privatisation transaction deemed appropriate by the Board, the
provisions of regulation 14 shall mutatis mutandis, apply to the appointment
of FA.
14. International capital offerings or any other Privatisation transaction.-
(1) For the purposes of international capital offerings or
any other Privatisation transaction deemed appropriate by the Board, the
Privatisation Commission with the prior approval of the Board, shall at all
times maintain panels comprising ten to fifteen Financial Advisors globally
recognised for international capital offerings or for the Privatisation
transaction in question. Such panels shall be based on the rankings of
internationally recognised and published league tables solely determined by
the Board and approved in its discretion. The Board shall review the rankings
of the Financial Advisors on its panel on a periodic basis.
(2) Subsequent to the decision by the Board to appoint
Financial Advisor with respect to an international capital offering or any
other Privatisation transaction, the Privatisation Commission shall send the
RFP package approved by the Chairman together with a request in writing to the
Financial Advisors on its panel to submit sealed technical, financial
proposals or both within twenty one days or such time as determined by the
Board of the date of such written request in accordance with the information
set-forth in the RFP package.
15. Repeal of regulations:-
(1) The Privatisation Commission (Hiring of Financial
Advisors) Regulations, 2001, are hereby repealed.
(2) Anything done, action taken, order passed, instrument
made, proceedings initiated, processes or communication issued, powers
conferred or assumed under the Regulations repealed under sub-rule (1), shall
be deemed to have been validly done, made, issued, taken, initiated, conferred
or assumed under the corresponding provisions of these regulations.
_____________________________________________________
[File No. 16(26) P&C/PC/2001]
(Hafiz Rahim Baksh)
Director (P&C)