The Cabinet Committee on Privatisation (CCOP) here on Thursday approved unprecedented major amendments to the Benazir Employees Stock Option Scheme (Besos), which offers a 12% share in public sector enterprises to their employees.
The restructuring has made the policy financially more sustainable through a reduction in offered benefits, while amendments to the eligibility criteria will make it easier for those who joined these enterprises during the last four years to avail the scheme.
President Asif Ali Zardari has already approved the amendments to Besos, after a detailed briefing was given to him on the status and impediments in implementation of the scheme.
Headed by Finance Minister Dr Abdul Hafeez Shaikh, CCOP has done away with a condition that requires a minimum of five years of service in a public sector enterprise for a person to be eligible to avail the scheme. The move will allow those employees who joined these enterprises after August 14, 2009 to benefit from the policy. The government has also capped the maximum benefit an employee can receive from dividend earned on shares at Rs1 million.
Another significant decision taken excludes the banking sector from the list of Besos institutions. The move was taken after the State Bank of Pakistan (SBP) demanded Rs18 billion from the federal government in return for transferring 12% of its shares in the National Bank of Pakistan, United Bank and Habib Bank.
The finance ministry has refused to pay the money, citing the “financial crunch the country was passing through.” The shortage of funds prevented the ministry from first buying the shares from the SBP and then transferring it to employees, according to an official.
The government has also excluded the Pak-Arab Refinery Company and the Pakistan Telecommunication Company from the Besos list after the joint venture entities refused to become part of the scheme.
Furthermore, the employees of Saindak Metals, the Hydro Development Institute of Pakistan, the Pakistan Electric Power Company, the Pakistan Engineering Company and the National Logistics Cell will not be able to avail the facility, as the government has delisted these five enterprises as well.
Initially, a total of 80 public sector enterprises had been selected for the transfer of 12% of the government’s holding in these entities to their employees. The total value of 12% of the government’s shares in these enterprises has been estimated at Rs116.1 billion. However, after deletion of the enterprises mentioned above, the amount will fall below Rs100 billion.
The latest amendments will make the Besos financially sustainable, saving Rs12 billion per annum that the government is supposed to pay on account of dividends to beneficiaries and buying back shares from retiring ones, said the Ministry of Privatization.
So far, the government has transferred unit certificates to 235,855 employees in 60 companies through Employees Empowerment Trusts. To date, Rs6 billion in dividends have been transferred to 11 entities. Out of that figure, Rs3 billion were paid to 25,505 employees and the remaining Rs3 billon transferred to the Central Revolving Fund.
The money was divided according to the old policy, which stipulated that half of the dividends be transferred to the Central Revolving Fund for annual payouts, and the rest be distributed among employees. Under the revamped policy, the employees’ share has now been reduced to a fourth, while 75% of the dividends will go to the Central Revolving Fund for annual payouts and buyback claims.
Furthermore, the Employees Empowerment Trust, setup in line ministries, has been allowed to purchase bonus shares and surrendered shares of employees to avoid dilution of the 12% shareholding under Besos.
Published in The Express Tribune, November 9th, 2012.