The government will offer 311 million OGDCL shares (7.5 percent of its holding) to the international and domestic institutional investors most probably by next month with a view to mobilising a minimum of $770 million. "We are going to finalise the book building date with the Financial Advisor for OGDCL shares transaction in the beginning of November 2014," said Privatisation Commission Chairman Muhammad Zubair, acknowledging that the completion of the transaction would pave the way for the release of a tranche by the International Monetary Fund (IMF).
He added that the exact date would be finalised next month. The government has decided to divest 10 percent OGDCL shares from its 85 percent holding in the company. An official of the Finance Ministry said the release of IMF tranche and cobbling of the fourth and fifth review of $6.64 billion Extended Fund Facility (EFF) were contingent on the completion of the capital market transaction of OGDCL and issuance of Sukuk bonds. The Fund has reportedly raised concern over the achievement of the revenue target subsequent to suspension of Gas Infrastructure Development Cess (GIDC) and has insisted on the establishment of a debt management cell in Ministry of Finance to which the government had previously agreed.
Zubair said that 3.5 per cent or 11 million shares would also be offered to the retails consumers and OGDCL employees and their price would also be determined later. He said the process for appointment of Financial Advisor (FA) for two more planned transactions of Habib Bank Limited (HBL) and Allied Bank Limited (ABL) has been accelerated and would be completed soon. He said that the basic work relating to education of prospective investors at key international capital markets for divestment of OGDCL shares was completed in light of court's directives and now the process of share transaction would be undertaken as was allowed by the apex court.
According to the IMF report prepared by the staff team for the Executive Board's meeting at the conclusion of third review, Pakistan was projected to require a gross financing of $2.619 billion for the first quarter of the current fiscal year against the available financing of $1.853 billion. The gap of $766 million was projected to be bridged through a $555 million from the IMF as well as $211 million other loans and grants.
An official said that the Finance Ministry wants a speedy materialisation of OGDCL transaction as well as Sukuk bonds to support the country's foreign exchange reserves and to meet its financing requirements, which are increasing due to a widening trade gap.
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