The government chose to employ a company on Monday to lease the Roosevelt Hotel in New York City, possibly ensuring the best use of the underutilized asset situated in the most desirable location.
According to the finance ministry, the Cabinet Committee on Privatization (CCOP) reiterated its prior judgment regarding the Roosevelt Hotel. The proceedings of the CCOP once again highlighted how inefficiently the country could manage even a privatization transaction for less than Rs 2 billion. The sale of the Services International Hotel, Lahore, has once more been submitted to the Law Ministry by the CCOP, which is headed by Finance Minister Ishaq Dar.
The committee also decided to remove the floundering SME Bank from the privatization agenda, which gave the PC and SME Bank enough of a foundation to be wound down. According to the Ministry of Finance, regarding the privatization of PIA Investment Ltd (PIA-IL)-owned asset – Roosevelt Hotel, New York, the CCOP decided to uphold its earlier decision dated July 2, 2022, where the meeting directed the Privatization Commission to begin the process of appointment of a financial adviser (FA) to undertake the envisaged leasing of Roosevelt site for putting up a joint venture proposal for a potential mixed-use development using the most appropriate privatization method.
It typically takes four months to find a financial advisor, who then needs a lot of time to develop a strategy. The local authority in New York may decide to designate the Roosevelt Hotel as a historic building. The Pakistani Foreign Office has gotten in touch with the New York administration to request that they not declare the structure a historic site. Pakistan has spent more than $150 million to pay for various costs related to the hotel’s shutdown. A public-private partnership may be used to build high-rise hotels on the site of the Roosevelt Hotel, according to a resolution made by the CCOP in October 2018 under the leadership of the former finance minister Asad Umar (PPP).
Deloitte was hired by PIA-IL, the parent business of Roosevelt Hotel and a fully-owned subsidiary of PIAC, to carry out a feasibility study. Deloitte stated in July 2019 that redeveloping the property into mixed-use, primarily an office tower atop retail and residential, would be the optimum use for the hotel. The CCOP then gave the Privatization Commission permission to start the process of choosing a financial advisor to handle the leasing of the Roosevelt property in July 2020. The employment of the adviser was started by the previous administration, and in September 2020, the board of the Privatization Commission accepted the draught terms of reference (ToRs).
But due to legal disputes about the Reko Diq project and Tethyan Copper Co. before the British Virgin Islands (BVI) court, the Attorney General of Pakistan (AGP) advised delaying the matter (TCC). The earlier approvals were only focused on the recommendations of a Deloitte report, therefore the Privatization Commission asked the CCOP for reaffirmation of the previous decision or guidance otherwise, as judged necessary. A summary of the privatization of the Services International Hotel was put on the table by the Privatization Commission. The finance ministry claims that after giving the subject significant thought, the CCOP submitted it to the Law and Justice Division for reconsideration of its initial judgment. Faisal Town (Pvt) Ltd made the highest offer in August 2021, and the federal cabinet approved it in October 2021 for Rs1.95 billion. When there were concerns about the assets being sold for less, the government formed a subcommittee, which after careful consideration determined that the prior assessment was fair at the time the assets were auctioned.
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