The finance ministry has revised privatisation revenue target, cutting it by 98 percent to Rs 1.6 billion for FY08 mainly due to slow process in the wake of domestic and external shocks on political and financial fronts.
The country has missed its privatisation revenue target of Rs 75 billion set for the current fiscal year because of political and financial uncertainties, making the government revise the target, sources said. The finance ministry was expecting that during the current fiscal year privatisation process will continue as that of previous years. However, financial uncertainties in the world markets and political instability in the country badly hurt the privatisation process and not a major transaction could be completed during FY08.
As per privatisation programme, the government had planned to bring in some Rs 75 billion through partial or complete privatisation of some government-owned institutions.
The privatisation of Pakistan State Oil, issuance of National Bank of Pakistan and United Bank Limited Global Depository Receipts (GDRs) were in the pipeline, however change of government, political battle and financial crunch on the international front compelled the government to stop the privatisation process.
Sources in the ministry of finance said that as per revised estimates during current fiscal year, the country is likely to receive an amount of Rs 1.65 billion on account of privatisation proceeds, against the budgetary target of Rs 75 billion, which depicts a decline of 97.8 percent.
After the new political government, the ministry decided to make the transaction of NBP, however this plan also got delayed due to the revision of Pakistan's credit rating by two leading rating companies, the sources added. During the current fiscal year, two transactions have been made by the private sector - GDR of Lucy Cement and 20 percent shares sale of MCB Bank to Maybank, Malaysia.
The transactions of Pakistan State Oil (PSO), Roosevelt Hotel, New York, Services International Hotel, Lahore, National Investment Trust Limited (NITL), Genco-1 Jamshoro and Hazara Phosphate Fertilisers Limited are at different stages of processing and are likely to go on the block in next fiscal year.
From 1999 to date, a total amount of 6.1 billion dollars have been realised from 61 privatisation transactions, which represents 87 percent of the total privatisation proceeds. Sources said that the domestic and external shocks not only increased the size of the fiscal deficit but also changed the composition of financing.