Capital market transactions of five SOEs: government has budgeted Rs 50 billion less of gross proceeds

The government has budgeted around Rs 50 billion less than was initially projected as gross proceeds of Rs 248 billion through prospective capital market transactions of five State-Owned Enterprises (SOEs) in 2014-15.
Spokesman and Advisor Finance Ministry Rana Asad Amin and Chairman Privatisation Muhammad Zubair Umar could not be reached for their comments till the filing of this report to explain the reason behind budgeting Rs 198 billion through privatisation proceeds when Privatisation Commission had projected gross proceeds at Rs 246 billion from prospective capital market transactions of five entities in the first six months of the next fiscal year.
Sources said that as per original plan prepared by the Privatisation Commission, the gross proceeds of five entities were projected at Rs 246 to Rs 248 billion through capital market transactions in two batches. The revenue was estimated at Rs 138 to Rs 140 billion through prospective capital market transactions in the first batch after off-loading 35 percent of these entities. The government has completed divestment of 20 per cent shares of United Bank Limited (UBL) while capital market transactions of remaining two entities of Oil and Gas Development Company Limited (OGDCL), and Pakistan Petroleum Limited (PPL) may take place in August-September 2014.
Sources further added that gross proceeds were estimated at Rs 109 billion through divestment of shares of two entities of Habib Bank Limited (HBL) and ABL: $1 billion through divestment of up to 42 per cent shares of HBL and Rs 9.8 billion through divestment of up to 10 per cent shares of ABL.
The government committed to the International Monetary Fund (IMF) that it would offer minority shares in three companies in domestic or international markets by end-June 2014 subject to investor interest and global market conditions. And financial advisors for at least two other companies would be hired by end-June 2014 to market minority shares within six months thereafter.
Sourced added that the strategy for divestment of five entities has been finalised to carry out the prospective transactions as per plan. However, they added that Privatisation Commission has conveyed to the Finance Ministry that the success of capital market transactions would depend on investment climate and market conditions as well as success in projecting Pakistan as an investment destination to attract international portfolio investment.