The Privatisation Commission will put the government's shares of Oil and Gas Development Company Ltd (OGDCL), United Bank Limited (UBL) and Pakistan Petroleum Limited (PPL) on sale in the capital market within the next 4 to six months. This was revealed in Pakistan Economic Survey 2013-14, released on Monday.
"The preparatory work for privatisation of Heavy Electrical Complex (HEC), National Power Construction Co (NPCC), Faisalabad Electric Supply Company (FESCO), GENCO III (TPS Muzaffargarh) and restructuring of Pakistan International Airlines (PIA) would be carried out in parallel on fast track basis," the survey further stated. In a recent development, 11 companies in the oil and gas, banking and insurance and power sector were identified for block sales and primary or secondary public offerings, from the list of 31 Public Sector Enterprises (PSEs) approved by the Cabinet Committee on Privatisation (CCoP) in October 2013.
Three financial advisors have been hired for UBL, PPL and OGDCL in May 2014. Minority shares in UBL and PPL will be offered to domestic and international investors by end-June 2014, subject to investor interest and global market conditions. OGDCL shares will be offered for sale early next fiscal year. Financial advisors for Allied Bank Limited (ABL) and Habib Bank Limited (HBL) will be hired by September 2014 for offering minority shares of these banks within six months.
Financial advisor for NPCC will be hired by end-June 2014 to finalise sale offer by end-December 2014. In addition, financial advisors for sale of shares of FESCO and Northern Power Generation Company Limited (NPGCL) will be appointed next year. For PIA, a financial advisor will be appointed by end-June 2014 to seek potential options for restructuring and strategic private partnership.
The government is also focusing PSE Reforms Strategy. Main focus of strategy is on improvement in corporate governance, restructuring of PSEs and strategic partnership through privatisation. The government has formed a high level commission for ensuring transparency in appointment of heads of key pubic sector organisations and bodies. In addition, Finance Division is also making efforts to develop a database on Government Investment Tracing and Performance Monitoring that will help make evidence based decisions for revival of PSEs.
The Board of Directors of Pakistan Steel Mills (PSM) was reconstituted in October 2013 with the addition of five members from the private sector and BoDs have recently identified a number of viable options of dealing with PSM's problems. The Economic Co-ordination Committee (ECC) recently approved a restructuring plan for PSM in April 2014 amounting to Rs 18.5 billion which envisages achieving 77 percent capacity utilisation of PSM by June 2015. Similarly, a bailout package of Rs 16 billion was approved in July 2013 for PIA out of which 14.6 billion was released by April 2014. An amount of Rs 33.5 billion has been allocated as grant to Pakistan Railways (PR) out of which Rs 27.9 billion was released by April 2014. For the development schemes, government has allocated Rs 30.9 billion in Public Sector Development Program (PSDP) for 2014.
On October 3, 2013, the Cabinet Committee on Privatisation (CCoP) earmarked a list of 32 Public Sector Enterprises (PSEs) in banking and finance, oil and gas sector, power, industries, transport and real estate, for early implementation, out of a list of 69 units of broad based privatisation programme. Pakistan's privatisation programme since its inception in 1991 has managed to complete 167 privatisation transactions, generating revenue of over Rs 476.4 billion including Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) of $6 billion.
A key element of the privatisation strategy is strategic partnership, which entails transfer of management of investors through partial sale of shares. The government's strategy will also focus on disinvesting the government's shareholding in various entities especially in oil and gas, power and financial sectors through capital market transactions, both on international and domestic markets.
Direct sale of assets and units to investors is also envisaged. This will help in broadening and deepening domestic capital markets. It will facilitate foreign direct and portfolio investments as well as mobilise savings of individuals, households and institutional investors of Pakistan by providing them an opportunity to take ownership in the successful businesses, through public offering of shares.
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