Pakistan set to start big ticket privatisation
January 06, 2014 - 9:37:31 am
ISLAMABAD: The Pakistan government is set to formally start the privatisation and restructuring process of various state-owned enterprises (SoEs) from January 8, the newly-appointed state minister and chairman of the Privatisation Commission, Mohammad Zubair, has said.
“We want top quality management for these entities as the government cannot afford to throw good money after bad. We will ensure complete transparency in the privatisation process by giving these SoEs in private hands for the best interest of Pakistan and its people,” Zubair said in an interview over the weekend.
Almost Rs500bn is wasted every year due to mismanagement and operational flaws, he added.
“According to official estimates, eight major state-run entities have been receiving more than Rs300bn in annual support and bailouts from the federal government,” said Zubair.
“This half-a-trillion rupee burden is about one-fifth of the country’s total tax revenue, which may otherwise be used for improving health and education sectors.”
Zubair said the Planning Commission board will meet on January 8 to take important decisions regarding the privatisation of some financial, petroleum and aviation sector entities in the first phase.
“We might have another board meeting in 10 days in which we will consider the privatisation of various entities belonging to the power sector and others,” he said.
Although, the minister did not disclose the names of those entities, an official source in the commission said that the agenda for the board meeting had been finalised and some of the entities to be privatised soon include Habib Bank Limited, United Bank Limited, Allied Bank Limited, Pakistan International Airlines (PIA), Oil and Gas Development Company Limited, National Power Construction Company, Heavy Electrical Complex and Pakistan Petroleum Limited.
“In the first phase, we are going to get an approval for entities that are easy to divest in a booming stock market scenario.
After the board’s approval, we will advertise in local and international media for financial advisors of these entities. We want financial advisors with best international repute,” said Zubair.
“After their nomination, they will provide a detailed report on the financial health of these entities to the commission, after which the bidding process will begin.”
With regard to the two main public sector entities, PIA and Pakistan Steel Mills (PSM), he said that about one-fourth PIA employees were in surplus and same was the case for PSM.
“However, while carrying out these transactions, employee sensitivity will be also kept in mind,” he added.
The government is vigorously working on the privatisation and restructuring of these loss-making entities. Prime Minister Nawaz Sharif reconstituted a six-member board of the Privatisation Commission on December 26.
The country’s privatisation programme has been stalled for almost seven years. In 2006, privatisation of PSM was rescinded by the Supreme Court based on reasons that included massive irregularities and lack of scrutiny of the buying consortium.
Since then the state has been injecting billions of rupees into these entities, even though they are incurring massive losses.
Under new structural benchmarks, Pakistan has agreed with the International Monetary Fund to initiate revenue-based load shedding in the power distribution companies and take action against tax dodgers.