Six SOEs to be privatized to achieve Rs 150 billion target

The Privatization Division will privatize six state-owned entities (SOEs) including two Re-Gasified Liquefied Natural Gas (RLNG) power plants, while revival of Pakistan Steel Mills (PSM) will be completed by the end of FY20, to achieve the budgeted target of Rs 150 billion.

Minister for Privatization Muhammadmian Soomro, Secretary Privatization Rizwan Malik and Special Assistant to Prime Minister on Information and Broadcasting, Dr Firdous Ashiq Awan held a joint press conference on the ongoing privatization program of the federal government.

Privatization Secretary Rizwan Malik said that the negotiations with UAE telecom company Etisalat are going in right direction as Etisalat offered more than $250 million against $800 million receivables to Pakistan Telecommunication Company Limited (PTCL), while a meeting on transfer of ownership of K-Electric would be held on Thursday (today). However, the Privatization Division could not give a timeframe that both matters would be resolved in the current financial year 2019-20.

Privatization Division has committed to International Monetary Fund (IMF) that it would privatize seven loss-making entities in the current financial year. Rizwan Malik said that the target of selling seven SOEs in current financial year was revised to six as Lakhra Coal Power Plant was out of privatization list due to court cases. The task of privatization of six entities was given in November 2018, he added.

He said that remaining entities have PSM, divestment shares of Mari Petroleum Company Ltd, SME Bank, Guddu Thermal Power Plant, Services International Hotel, Lahore, and twenty-seven government properties that are non-utilized.

The minister for privatization said that rules of Public Procurement Regulatory Authority (PPRA), past court judgments and Privatization Ordinance will be fully observed while carrying out the privatization of the state-owned entities.

He said bids have been received for strategic sale of Haveli Bahadur Shah Plant of 1230MW and Balloki power plant of 1,223 MW, which show bidders' trust in present government's economic policies. Such strategic sale usually takes two years to complete, he added.

Earlier, Rizwan Malik said that five entities out of 18 on the active privatization list are making losses and the government has tasked Privatization Commission to privatize them on fast track basis.

He said Etisalat has given a counter proposal two months back. "The company has also given certain pre-conditions for resolving the pending amount of PTCL under a framework settlement," he said.

He said the government opted to resolve the issue with UAE Etisalat in an amicable manner; however, the government has option to take legal course. "We have firmed up a position for counter proposal of Etisalat in consultation with relevant ministries which would be passed over to them." Subsequently, a serious negotiation would be initiated for some mutual agreement, he added.

Te secretary further said that the resolution of transfer of 66 percent shares of K-Electric from one private party to another is at advance stage. Out of 16 ministries, nine have submitted with Privatization Division their conditions which were hurdle in providing a national security certificate to the selling party. Ministries and K-Electric have disputes on receivable and payables.

"We have finalized two agreements/deeds of establishment with ongoing investor and deed of undertaking with buyer and a mechanism for settlement of receivables and following agreements like power purchase agreements with Energy Ministry are decided," he added.

"A proposal of China's state-owned Shanghai Electric Power (SEP) is under consideration to resolve the issue either through judicial process or some kind of arbitration," he added. The secretary said due diligence of twenty-seven government properties, that are non-utilized, has also been completed. In her remarks, Dr Firdous Ashiq Awan said the non-functional government institutions will be privatized to make them functional.