Launch of Besos: Rs 46.7 million additional expenditure incurred by PC

The Auditor-General of Pakistan (AGP) has taken notice of Rs 46.7 million additional expenditure incurred by the Privatisation Commission (PC) on launching Benazir Employees Stock Option Scheme (Besos) during the current fiscal year, sources said on Wednesday.
The Privatisation Commission requested the government for a supplementary grant for the promotion of BESOS which swelled its current expenditure by Rs 46.7 million during 2011-12. Despite massive campaigning, the number of beneficiaries of the scheme remained limited, sources claimed. Around 64 Besos Trusts were registered to benefit just 306,473 workers of state-owned entities so far. Issuance of BESOS to State-Owned Entities (SOEs) is still under discussion, sources in the PC said.
Sources said on condition of anonymity that the PC was reluctant to give physical ownership of 12 percent shares of SOEs worth Rs 264 billion under Besos despite immense pressure from the government. The stock option scheme was designed as a special instrument and operates under a framework approved by the Federal Cabinet. Under the scheme, 12 percent GoP shares are transferred to entity-based trusts free of cost for a specific period.
Sources said that the employees were given unit certificates while shares were retained by the respective trusts. These shares are subsequently transferred back to GoP for buyback of claims of the beneficiary employees, sources added. In this respect, the PC submitted a summary to the Cabinet Committee on Privatisation in its meeting held on March 8, 2011.
The PC, in its summary, proposed CCOP to confirm that only cash dividend is to be retained for benefit of the employees. The scheme does not provide clarity for retaining 50 percent bonus shares by the Trust for benefit of the employees as it is not possible that 50 percent bonus shares can be remitted in CRF which, by definition, is a fund account to receive and disburse cash. Sources said the matter is still pending as no decision has been taken so far.
PC's current expenditure increased from Rs 74.7 million to Rs 121 million during the current fiscal year after the approval of the supplementary grant of Rs 46.7 million. The government released the grant despite the fact that the Commission missed its target of Rs 70 billion and instead privatisation proceeds for the year were zero.
The Commission failed to float the Secondary Public Offering of Pakistan Petroleum Limited Shares in domestic market in current fiscal year. The PC also could not convince the UAE Telecom Company to pay outstanding amount of $800 million for PTCL's privatisation. Road shows for OGDCL Exchangeable Bonds were also not successful.