ISLAMABAD: Privatisation Commission has completed the process of appointment of financial advisors (FAs) for strategic sale of four Power Distribution Companies (Discos) on a fast-track basis, an official of Privatisation Commission told Business Recorder. He said that appointment of FAs for strategic sale of Islamabad Electric Supply Company (IESCO), Lahore Electric Supply Company (LESCO), Faisalabad Electric Supply Company (FESCO), and National Power Generation Company Ltd has been completed and the government wants to sell these entities to a single buyer.
The process of appointment of FAs for strategic sale of National Power Construction Corporation (NPCC), and PIA has also been completed. The official said the divestment of shares of Discos, NPGC or NPCC in the capital market is not possible as they are not listed on the stock markets and also involve transfer of assets like properties and land. Besides, the government is interested in transferring these state-owned entities to one buyer on its own conditions and price which is not possible through capital market transactions, he added.
Privatisation Commission's board in its meeting on May 29, 2015 approved the sale price of Heavy Electric Complex and sale purchase agreement (SPA) with Cargill Holdings will likely be signed next month, the official said. The (HEC) will be the first strategic sale in next fiscal year with sell-off of 97 percent or 1.4 million shares. The Cabinet Committee on Privatisation (CCOP) does not take a decision on which companies will be sold through strategic disinvestment because this is something the Privatisation Commission proposes after in-house deliberations and consultations with financial advisers.
Khurram Shabbir, Director Fair Deal Securities (Pvt) Ltd told Business Recorder that under privatisation procedure, a normal transaction for strategic sale takes at least 18-months - from the issuance of advertisement for expressions of interest to appointment of financial advisers, selection process, the timeline for preparation of the transaction, and different deadlines under privatisation rules for bidders, due diligence and the ultimate sale process. Whereas, the capital market transaction is an easier way to privatise the entities. Pakistan International Airline's liabilities - running into more than Rs 250 billion - would be parked in existing PIA, while its core operations, particularly aircraft and related businesses, would be separated into PIA-2, whose 26 per cent shares, along with management control, would be offered to a strategic partner. Mari Petroleum Limited, a joint venture of the federal government and Fauji Foundation, is also among entities included in the first batch of fast-track privatizations though it is not yet clear if the government would divest its 20 per cent shares through the stock exchange or through block sale to a joint venture partner.
Another official of PC said the government is working on strategic units cleared by the CCOP, but a large number of these entities would require a lot of effort and energy for restructuring before they could be taken to the sale counter. After coming into power, the Pakistan Muslim League-N government initiated the process of sale of 31 state-owned entities through initial and secondary public offering and transfer of 26 per cent shares, along with management control, to the private sector.